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Cb -- Q3 2012 Venture Capital Activity Report (CB Insights)

Cb -- Q3 2012 Venture Capital Activity Report (CB Insights)

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Published by: John Cook on Oct 17, 2012
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Venture Capital Activity Report
| Q3 2012
www.cbinsights.com
QUARTER SUMMARY 2QUARTERLY TRENDS 3SECTOR REVIEW 12
1INTERNET 122MOBILE & TELECOM 193HEALTHCARE 264GREEN / CLEAN TECH 33
GEOGRAPHIC REVIEW
1CALIFORNIA 402MASSACHUSETTS 473NEW YORK 524WASHINGTON 585TEXAS 63
DEFINITIONS & DATA INTEGRITY 68
TABLE OF CONTENTS
© 2010, CB Insights. All rights reserved. For more information about CB Insights, please email info@cbinsights.com.
 
 
Venture Capital Activity Report
| Q3 2012
www.cbinsights.com
Q3 2012
 ±
This Quarter in Venture Capital
'HDOVWUHQJWKFRQWLQXHVDV4¶UHJLVWHUVPRVWGHDOVVLQFHGRWFRPERRP)XQGLQJUHPDLQVVWURQJEXWGRZQYV4¶¶VELJTXDUWHU2YHUDOOORRNVOLNHLWZLOOEHD
down year for VC funding relative to 2011 barring a freakish 4
th
quarter tally.
2
VCs remained ready, willing and able to invest in Q3 2012 making 835 investments totaling $7.5 billion. The deal count wasthe highest since the dot com days largely driven by what seems to be an insatiable VC appetite for making small seedinvestments in fledgling companies. The funding tally
ZDVDOVRVWURQJDWELOOLRQEXWGRZQUHODWLYHWR4¶ZKHQLW
registered $7.9 billion. It was also down versus the gargantuan $8.1 billion witnessed in the prior quarter.Of course, when one reads the words
³GRWFRP´
in the same sentence as VC, the bubble chatter begins. We, again, think it
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bet a healthy sum of money that it
ZRQ¶W
2012 will actually be a down year in terms of total VC funding to companies.Yes, there continues to be frothiness in the Seed VC investing
DUHDDV4¶
saw yet another uptick in already-high SeedVC deal volumes. And yes, the size of Seed VC deals is growing, following suit with volumes. So the reality is that there willeventually be blood among these Seed VC companies as many will be orphaned or just unable to raise follow-on financing.
7KHSURYHUELDO³EORRG´KRZHYHULQWKLVFDVHZLOOQRWEHWKDWRI9&V6HHG9&LVDORZULVNFDOORSWLRQIRUPRVW9&V,ID
llSeed VC deals failed, it would be the equivalent of a single medium-sized VC fund going out of business. That happens allthe time and presents no risk to the entire VC ecosystem. If it becomes easy for companies with little or no traction to raise
ELJ6HULHV&DQG'URXQGVWKHQZH¶OO
more openly entertain talk of a VC bubble.
Note: Only deals in which VCs are participating are included. Companies which raise money from mutual or private equity funds or corporations (unless it is their corporate venture arms) are not included. We recommend you review our definitions and methodology on p. 68 to see what is included/excluded as there is a great amount of misinformation out there.
 
Bigger, Faster Seed Planting
 
Seed investing represented 31% of all VC deals. Mobilesaw 42% of its deal volume at the Seed VC level.Healthcare also saw growth in Seed investing as well.Both internet and mobile saw larger Seed VC medianshitting the $1 million mark for the first time suggesting thatthe frenzy for Seed VC investing is allowing entrepreneursto raise larger seed rounds than in the past.
The Mobile Wild West
VCs clearly are positioning themselves for the next bigwave they see in mobile. While big deals in security andpayments buoyed funding totals, the deal breakdown byindustry within mobile remains diverse. For the first time,Cali actually saw more activity to the mobile sector thanHealthcare.
Green Tech Fizzes; Reveals Unusual Suspects
The clean tech doldrums continued with both deals andfunding hitting five quarter lows. Interestingly, NY andIllinois took #2 spots for green tech deal and fundingactivity, respectively.
Healthcare Deals Dip; Funding Stabilizes
Third straight quarter where healthcare deals decline.
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 Southern California
 ±
Can I Get a Little Respect?
We broke out some stats on Silicon Valley vs. SoCal (p46) after some of our customers in the area told us SoCalwas the Rodney Dangerfield of VC markets. And therewas something to their claims. Based on VC funding,SoCal was actually the 3
rd
biggest market ahead of NYand just behind Silicon Valley and Massachusetts.
 NY Does it Smaller; Maybe Not a One-Trick Pony
 
New York deal count hit five quarter high but is dominatedby lots of small Seed VC deals (49% of deals). Althoughstill very tech dominant, the quarter did see NY register signs of life in both green tech and healthcare whichtypically are nowhere to be found.
Mass Bucks National Trend
 ±
Deals and Dollars Up
 
Massachusetts, which fell on both deals and dollars lastquarter, increased on both this go around. The marketsaw strength in mobile as well as a modest comeback inthe healthcare sector.
Washington and Texas Both Fall Down
  After a couple of strong quarters, Washington fails tokeep its momentum slipping on both deals and dollars.Texas continues its recent descent with deals and fundingboth being weak.
 
 
Venture Capital Activity Report
| Q3 2012
www.cbinsights.com
$7.5B in 835 Deals
 ±
Deal Volume Continues to Climb
Q3 2012 sees deal volume continue to climb although overall funding drops from theprevious quarter. Funding levels down 6% year over year.
3
$5.4$6.5$7.5$7.7$7.9$7.6$5.9$8.1$7.5715735749781790755785812835Q3'10Q4'10Q1'11Q2'11Q3'11Q4'11Q1'12Q2'12Q3'12
Quarterly VC Investment and Deal Volume Trend
Q3 '10 to Q3 '12Investment ($M)Deals

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