The venture capital industry may actually—finally—be showing some signs of recovery, with total dollars invested up 15 percent compared to the first quarter of the year. Granted, the level of investment is still down more than 50 percent compared to a year ago—but it’s certainly not the 41 percent sequential decline that PricewaterhouseCoopers and the National Venture Capital Association tracked between the fourth quarter of 2008 and the first quarter of the year. Not sharing in any of the gains, however, according to the quarterly report: Either internet-specific companies or media and entertainment companies, which both saw quarter-to-quarter drops in funding.
—Left out: There were 124 investments in internet-specific companies, totaling $524 million during the quarter. Dollars invested were down 15 percent and total deals were down 12 percent, compared to the first quarter of the year. Media and entertainment companies, meanwhile, saw a 48 percent decline in dollars invested.
—On stage: Early-stage companies and expansion stage companies both saw increases in investment, with seed and early stage investment up 67 percent during the quarter. Later stage companies, however, saw a 20 percent drop in dollars invested. According to the report there were the lowest number of first-time financing deals in 15 years.
—Outlook: You’ve heard it before. Yes, there are some positive signs. However, with venture funding and exits low, don’t expect big increases increases soon, says Mark Heesen, the president of the National Venture Capital Association.
By Joseph Tartakoff