U.S. Venture Investment Struggles in Third Quarter
Dow Jones VentureSource: Business and Consumer Services, Healthcare, and
Energy Decline; IT Remains Steady
NEW YORK, Oct. 19, 2012 (GLOBE NEWSWIRE) -- U.S.-based companies raised $6.9
billion from 820 venture capital deals during the third quarter of 2012, a 32%
drop in capital and a 9% decline in the number of deals compared to the same
quarter last year, according to Dow Jones VentureSource.
During the first three quarters of 2012, venture capital investment totaled
$22.8 billion for 2,525 deals, a 15% and 3% decline in capital and deals,
respectively, compared to the same time frame a year ago.
"Past trends have proven the resilience of the venture capital industry," said
Maryam Haque, senior research analyst for Dow Jones VentureSource. "While the
industry had a shaky third quarter and the year is off pace from 2011,
investors continuing to put their faith into early stage rounds show signs of
The median amount invested in a financing round was $3.7 million in the third
quarter of 2012, much less than the $5.7 million median from the same quarter
last year and the lowest since 1997.
Google Ventures led the pack for investments in U.S.-based companies. The
venture arm participated in 21 deals during the third quarter, including eight
for software companies and five in the business support services sector.
Late-stage deals comprise majority of invested capital; first rounds account
for most deals
Though later-stage deals accounted for 61% of the capital invested in the
third quarter, first rounds accounted for the largest proportion of deals,
39%, or 309. However, this corresponded to a 33% decline from the third
quarter of 2011, when the same number of first round deals raised $1.9 billion
Business and financial services decline overall, but bright spot within
financial services segment
Investments in business and financial services raised $1.2 billion for 126
deals in the third quarter, a 35% drop in capital and a 25% decline in the
number of deals compared to the same quarter last year.
Within the industry, investment in financial institutions and services segment
suffered an 11% drop in the number of deals, but saw a 43% increase in
capital, largely attributed to Square Inc., a provider of mobile phone payment
solutions, which had the largest investment of the quarter. The company
garnered $175 million in a later stage round with institutional investors, as
well as a $25 million corporate investment from Starbucks Corp.
Consumer services regresses
After a strong second quarter, investment in consumer services regressed and
is off pace for the year. Capital raised fell to $1.2 billion for 158 deals, a
38% drop in capital and an 8% decline in deals compared to the same quarter
"Investors have been stingier with their capital than they were last year,
partly due to Web start-ups needing less cash to get off the ground," said
Zoran Basich, editor of Dow Jones VentureWire. "Especially in an area like
consumer services, investors are able to place much smaller bets in the early
IT investments remain strong, particularly in software
Information Technology (IT) continues to attract the largest bulk of
investors, accounting for 33% of the investment and 35% of the transactions
during the third quarter of this year.
IT companies raised $2.3 billion for 290 deals in the third quarter of 2012, a
2% drop in capital but a 3% increase in deal flow as compared with the same
quarter last year. Software continued to comprise the majority of the deals,
garnering $1.6 billion in capital from 230 deals, which corresponded to 14%
and 10% increases, respectively, from the same time frame last year.
Healthcare struggles, biopharmaceuticals showing signs of relief
Healthcare companies raised $1.6 billion for 171 deals in the third quarter, a
26% decline in capital and a 15% decline in deals compared with the same
quarter last year.
Biopharmaceutical companies showed signs of relief after a poor start to the
year and was one of the only industries to have a positive quarter. Within the
healthcare sector, which also includes healthcare services, medical devices
and equipment, and medical software and information services, only
biopharmaceuticals saw an increase in investment. Biopharmaceutical companies
raised $788 million in 70 deals, an 8% increase in capital from the third
quarter last year despite a 9% drop in the number of deals.
Energy continues to slump
Investment in energy and utilities saw the most significant drop among all
segments. The segment, which had the worst quarter since the first quarter of
2006, raised $169 million for 19 deals in the third quarter, an 86% decline in
capital and a 54% decrease in the number of deals compared to third quarter
Investment in renewable energy continued to account for the greatest number of
deals within the energy group, raising $162 million through 12 deals.
For general information about Dow Jones VentureSource,
visithttp://www.dowjones.com/pr/privatemarkets. For information on Dow Jones
VentureSource's research methodology, visithttp://bit.ly/VSFAQs
About Dow Jones
Dow Jones & Company is a global provider of news and business information and
a developer of technology to deliver content to consumers and organizations
across multiple platforms. Dow Jones produces newspapers, newswires, Web
sites, apps, newsletters, magazines, proprietary databases, conferences, radio
and video. Its premier brands include The Wall Street Journal, Dow Jones
Newswires, Factiva, Barron's, MarketWatch, SmartMoney and All Things D. Its
information services combine technology with news and data to support business
decision making. The company pioneered the first successful paid online news
site and its industry leading innovation enables it to serve customers
wherever they may be, via the Web, mobile devices and tablets. The Dow Jones
Local Media Group publishes community newspapers, Web sites and other products
in six U.S. states. Dow Jones & Company (www.dowjones.com) is a News
Corporation company (Nasdaq:NWS) (Nasdaq:NWSA) (ASX:NWS) (ASX:NWSLV)
The Dow Jones & Company logo is available at
CONTACT: Media Contact:
Dow Jones & Company
Dow Jones & Company Logo
Press spacebar to pause and continue. Press esc to stop.