NEW YORK – Deal flow increased in venture capital investment during 2010 for the first time in two years and posted the first positive year-over-year gain since 2007, according to the latest MoneyTree Report from the National Venture Capital Association (NVCA) and Pricewaterhouse Coopers.
Venture funds invested 19 percent more at $21.8 billion in 2010 and deals grew by 12 percent, totaling 3,277.
Mark Heesen, president of the NVCA said, “We were clearly in recovery mode and we hope this continues in 2011.” You can catch up with Heesen and hear his latest perspective on the VC industry in person at TechMedia’s fifth annual Southeast Venture Conference in Atlanta March 2-3.
Although venture funding slowed in the last two quarters of 2010, a strong first quarter and better second quarter kept the year’s numbers in positive territory.
Companies landing venture backing for the first time increased 30 percent, which is a good sign that VCs are deploying capital again, after hoarding cash for portfolio firms during the recession.
Software firms grabbed the biggest slice of venture pie last year, with 835 firms getting $4 billion, about a 20 percent increase over 2009.
Clean tech companies saw an increase of 76 percent in dollars invested and the sector tallied 37 percent more deals than in 2009. Clean tech accounted for five of the ten venture deals chalked up in the last quarter of 2010.
The last quarter’s largest deal shows the continuing attraction of social media. Investors poured $200 million in microblogging site Twitter, making it the second largest deal of the year. Only the $350 million invested in California clean tech firm Better Place was larger.
Silicon Valley asserted its continuing dominance and accounted for five of the biggest deals in 2010.
Most sectors saw double-digit increases in investments over 2009, including telecom (up 77 percent) and IT services (up 44 percent).
Internet specific companies saw a 28 percent boost in dollars ($1.2 billion) and was up 14 percent in deals (190).