Venture capital investment going to start-ups in the U.S. stabilized in the second quarter at $3.7 billion, according to the latest MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association. This is about a but is 15 percent increase compared to the low point in the first quarter of 2009 (when it was $3.5 billion). However, VC investment is still only about half of what it was during the 2nd quarter of last year when it was at $7.2 billion. Average deal size was also up a little bit to $6 million, from $5.3 million last quarter.

vc-dollars-2q09

Most of the new investment came from biotech and medical devices, which saw pretty big increases in funding during the quarter to $88 million and $628 million respectively. Clean tech isn’t doing very well compared to a year ago, with only $274 million invested during the second quarter ($911 million a year ago). Internet deals brought in only $524 million in the quarter, down from $593 million the quarter before and $1.7 billion a year ago.

vc-q2-2009-sectors

I’m not so sure anyone should be looking at this new data as a real VC investment “rebound”, nor as a so called “green shoot” of the economy. This data only shows money invested by VC firms, but not new money raised. Much of the VC money being invested now was raised well before the crash in the end of 2008. Significant amounts of new money being raised by VC firms might be indicative of some real investor confidence, but I don’t see that happening, especially with the foreseeable tax increases coming. Mark Heesen, president of NVCA, has this to say about fundraising:

Until we see notable upticks in venture fundraising and exit activity — which drive investment levels — we won’t expect considerable increases in the number of deals completed each quarter.

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One Comment on “Venture Capital Investment Shows Signs of Stabilization in Second Quarter”

  • Walking on water these days works only if it’s an inch or so deep. The trillions-of-dollars depth of this economic tsunami might not hold O up past September.

    September is the magic date for all his plans to be tucked in and secured with their seatbelts for the long ride into the future – an unending democratic giveaway.

    O’s health care reformed, his climate bill done and his economy picking up by September gets everyone ready for sighs of relief and hopefully a return of O’s polls to the 60 percent zone..

    But trillions of dollars of debt is a lot of water to wade through much less walk on. And we’re already in the hurricane season that started June 1 and is expected to end November 1.

    Weather vanes and polls are quivering.

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