Venture Capital Investments Surge in 2010, Showing Signs of Recovery

Strategic Insights -

Venture capitalists invested a total of $21.8 billion in 3,277 deals in 2010, marking a 19 percent increase in dollars and a 12 percent rise in deals from the prior year. This represents the first time the annual investment level has increased since 2007. The fourth quarter of 2010 saw $5.0 billion invested in 765 deals, a 2 percent increase in dollars but a 3 percent decrease in deals from the third quarter. The rise in venture investments in 2010 was widespread across almost every industry, with double-digit increases in investments in the Clean Technology and Internet-Specific sectors.

Key Takeaways:

  • Venture capitalists invested $21.8 billion in 3,277 deals in 2010, a 19 percent increase in dollars and a 12 percent rise in deals from the prior year.
  • The fourth quarter of 2010 saw $5.0 billion invested in 765 deals, a 2 percent increase in dollars but a 3 percent decrease in deals from the third quarter.
  • Double-digit increases in investments in 2010 were seen across almost every industry, with the Clean Technology sector experiencing a 76 percent increase in dollars and a 37 percent increase in deal volume from 2009.
  • Internet-specific companies saw a 28 percent increase in dollars and a 14 percent increase in deals from 2009.
  • First-time financings jumped 29 percent in both dollars and deals from the prior year, rising to $4.3 billion going into 999 companies.
  • The Life Sciences sector (Biotech and Medical Devices combined) accounted for 28 percent of all venture capital dollars invested in 2010, down from 33 percent in 2009.
  • Expansion Stage investments increased by 47 percent in dollars and 21 percent in deals in 2010, with $8.5 billion invested in 1,021 deals.

Statistics:

  • $21.8 billion was invested in 3,277 deals in 2010.
  • 2,555 deals were invested in the Seed Stage category in 2010.
  • 1,147 Early Stage deals were made in 2010, with $5.3 billion invested.
  • 1,021 Expansion Stage deals were made in 2010, with $8.5 billion invested.
  • 746 Later Stage deals were made in 2010, with $6.3 billion invested.

Sources:

  • MoneyTree Report by PricewaterhouseCoopers LLP and the National Venture Capital Association (NVCA), based on data from Thomson Reuters.
  • www.pwcmoneytree.com
  • www.nvca.org
  • National Venture Capital Association (NVCA) represents more than 420 venture capital firms in the United States.
  • 2009 Global Insight study, venture-backed companies accounted for 12.1 million jobs and $2.9 trillion in revenue in the U.S. in 2008.