Thursday, May 31, 2007

VC Update - Q1 FY07

According to the MoneyTree Report by PricewaterhouseCoopers and the national Venture Capital Association based on data by Thompson Financial, in the first quarter of the year 2007, venture capitalists invested $7.1 billion into 778 deals, which was the highest quarterly dollar amount since the fourth quarter of the year 2001. Compared with the fourth quarter of the year 2006, deal value actually declined in the quarter, which indicates venture capitalists' eagerness to put more dollars into each round.

While Biotechnology ranks as the number one industry for investment, the Life Science sector had an extremely strong quarter. Since the fourth quarter of the year 2002, later stage investing also jumped in the quarter to the highest dollar level. First time financings remained quite stable, increasing slightly over last quarter.

Tracy Lefteroff, the global managing partner of the venture capital practice at PricewaterhouseCoopers said, "This quarter, the breadth of investing in a wide variety of industry segments and in companies across varying stages of maturity indicates a healthy balance between short- and long-term opportunities".

According to Mark Heesen, the president of the National Venture Capital Association, right now the Life Science sector is getting a lot of attention but it is an industry that is indeed scalable. To get through the regulatory process, biotech and medical device companies needs a large amount of capital and the Venture Capital industry is responding to this demand.

Investments in Later Stage companies augmented considerably in the first quarter of the year 2007 with $3.0 billion dollars going into 245 deals. In over six years, this was the highest dollar level. Funding dollars for Early Stage companies declined 30% in Q1 to $1.1 billion in 259 companies. Investments in Expansion Stage companies experienced a modest increase in dollar in Q1, growing nearly 9% to $2.9 billion invested into 274 deals.

Compared with the preceding quarter, fewer companies received funding for the first time in Q1 2007. Nevertheless, the dollar value of the rounds was collectively higher. In the first quarter of the year 2007, US based venture capitalists invested $83 million into 2 deals in India and $137 million into 18 deals in China.

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