2011 Q2 VC Funding Up for Life Sciences, CleanTech Stalls

Venture capital (VC) funds and the number of VC deals increased in the second quarter of 2011 compared to the first quarter, with companies in the life sciences and semiconductors among those reaping the benefits. The data were collected by Thomson Reuters and published in the MoneyTree Report from PricewaterhouseCoopers LLP and the National Venture Capital Association.

The report shows VCs overall invested $7.5 billion in 966 deals in the second quarter of 2011, an increase of 19 percent in both dollars and the number of deals compared to the first quarter of 2011 when $6.3 billion was invested in 814 deals. The 1,780 deals in the first half of 2011 is about the same as the 1,784 deals in the first half of 2010, while the $13.8 billion invested in the first half of 2011 is a 12 percent increase over the $12.3 billion invested in the same period in 2010.

Life sciences enterprises were among the big winners in the second quarter. Investment in biotechnology companies jumped 46 percent to $1.24 billion in the second quarter from $847 million in the first quarter, rising to second place among industries tracked by MoneyTree; software investments topped the list at $1.52 billion. Biotech investments fell somewhat from the $1.37 billion in the second quarter of 2010. VC funding of medical device companies rose 26 percent to $841 million in the second quarter, which was also an increase over the $771 million in the same quarter of 2010.

Funding of semiconductor companies also showed increases in the second quarter. VCs invested $325 million in semiconductor companies last quarter, a 22 percent jump from the first quarter, and an 11 percent gain over the same period in 2010.

VC funding of clean technologies — a category consisting of alternative energy, pollution and recycling, power supplies and conservation — showed a mixed pattern in the second quarter. The number of deals increased from 73 in the first quarter to 81 in the second quarter, but the amount of funding dropped by nearly a quarter to $942 million. For the first half of 2011, however, both the number of deals (154) and investment dollars ($2.2 billion) are about the same as the first half of 2010.

In the second quarter, seed (start-up) and early stage investments overall rose 24 percent over the first quarter in both dollars and deals with $2.4 billion going into 464 deals in the second quarter. Seed and early stage deals accounted for 48 percent of total deal volume in the second quarter, compared to the first quarter when it accounted for 46 percent of all deals.

VC’s expansion stage investments increased 9 percent in the second quarter, with $2.3 billion going into 260 deals. Later stage funding increased 24 percent in dollars and 16 percent in number of deals to $2.8 billion going into 242 transactions.

Read more: Cleantech, Electronics Venture Funding Jump in 2010

Photo: Jorge Franganillo/Flickr

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