Venture capital (VC) funding in the U.S. for new companies overall, including science-based enterprises, dropped in the third quarter of 2010, according to a new MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association based on data provided by Thomson Reuters. Overall, VC companies invested $4.8 billion in 780 deals in the third quarter of 2010, a decrease of 31 percent in terms of dollars, and a 19 percent decline in the number of deals compared to the second quarter of 2010. Most industry sectors, says the report, experienced declines in the number of deals and amount of funding.
Biotechnology companies received the second highest level of funding for all industries, after computer software, in the third quarter with $944 million going to 108 deals. This level marks a 32 percent decrease in dollars and a 29 percent decrease in deals compared to the second quarter when $1.4 billion went into 152 deals.
Medical devices and equipment firms experienced a 27 percent decline in dollars and an 18 percent decline in number of deals in the third quarter with $573 million going into 82 deals. This group ranked third overall for the quarter.
The clean technology sector, which crosses traditional MoneyTree industries and comprises alternative energy, pollution and recycling, power supplies, and conservation, had a 59 percent decrease in dollars to $625 million compared to the second quarter, with the number of deals in the third quarter also dropping by 26 percent to 58. The report attributes the decrease in clean technology investments to a lack of large investment rounds, which occurred in previous quarters.
VC investments in semiconductor enterprises dropped about 1 percent, to just under $250 million in the third quarter although the number of deals increased from 30 to 40.
Despite the broad-based declines, the report notes some hopeful signs for the future. First-time recipients of VC investments recorded 255 deals totaling $1.2 billion in the third quarter of 2010, about the same as the $1.2 billion in 288 deals during the previous quarter. It was the fourth straight quarter where $1 billion or more was invested in first-time deals. Biotechnology companies were among the top first-time recipients, along with software and IT services firms.
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