VC Activity Report

Venture Capital Activity Report | Q4 2011
TABLE OF CONTENTS
QUARTER SUMMARY QUARTERLY TRENDS SECTOR REVIEW
1 2 3 INTERNET HEALTHCARE GREEN / CLEAN TECH
2 3 11
11 18 25
GEOGRAPHIC REVIEW
1 2 3 4 5 CALIFORNIA MASSACHUSETTS NEW YORK WASHINGTON TEXAS 32 38 43 49 54
DEFINITIONS & DATA INTEGRITY
59
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Q4 2011 This Quarter in Venture Capital

Bam! 2011 VC investment and deal totals mark highest seen in 10 years. Talk of bubble begins in 3, 2, 1..
VCs werent bashful in Q4 2011 showering 755 companies with $7.6 billion in venture funding. Q4s performance brought 2011s total to $30.6B invested in 3051 deals which marked a 10-year high for the VC asset class on both deals and dollars.
The Fat VC Funnel So with 2011s results, the bubble talk will shift into overdrive. The reality is that VC funding is a funnel. More companies get Series A than B than C etc, etc. Within tech, our data shows the VC funnel has gotten fat at the top (a lot of Series A and Seed deals). And VC Darwinism means that not all of these companies can or should receive Series B, C, etc. While some would say this is the way markets work, for a company raising money, this can represent a chokepoint. Some will receive funding, some will die quickly, some will get acqhired or get dressed up as acquisitions, some will be orphaned and figure out a way to make money and become steady businesses and some will die a slower, more tortured death. New York Back to Reality or a Speed Bump? One quarter does not a trend make. So after taking the #2 spot for aggregate VC deals and dollars in Q311, NY slipped back to #3 behind Massachusetts. The state retains its hold on #2 for tech deals and dollars and showed some life in the healthcare realm as well. Well see if NY can fight back like its resilient football Giants or whether the state will just talk incessantly and not perform like the Jets in future quarters.
Healthcare VC Rumors of Death Greatly Exaggerated Healthcare hit a five quarter high on funding and showed solid deal activity. Sector reverses downward trend and shows pulse to close out 2011. Massachusetts Balanced Attack Brings It Back to #2 Massachusetts took back its #2 spot for both deals and dollars with deals across multiple sectors. Healthcare was particularly strong. Internet investment in the state was the one weak spot in an otherwise strong showing. Internet Takes 1/3 of VC Dollars in 2011 Cali and NY account for 59% of internet VC deals and 66% of funding. Internet investments took over 1/3 of venture dollars in 2011. Massachusetts fell to a five quarter low on internet deal share. Mega-deals in the data storage (Dropbox and Box.net) buoy funding. California Steady as Ever. Cali still the top spot for VC deals and dollars. Nuff said. Washington Stalls. Again. Well bring back our Sleeping in Seattle metaphor as Washington continued its multi-quarter dealflow slide and also came down on funding.
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. 59 to see what is included/excluded as there is a great amount of misinformation out there.
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$7.6B over 755 Deals Q4 Continues 2011s Torrid Pace

Q4 11 was slower than recent quarters but continued 2011s strong VC performance. 2011 reaches $30.6B in total venture funding marking 10 year high.
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Back to Reality? Mass Deal Share Eclipses NY

NYs rise to #2 was short-lived as Mass regains its #2 spot on deals. Cali, Mass and NY continued to own 60+% share of deals.
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Cali Dominates. Mass & Cali Take 65% of VC Dollars

NY funding share dipped back to historical levels. California and Mass took significant share of venture dollars with Texas registering a big quarter on back of big deals.
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Sector Coverage Green/clean tech Internet Mobile & Telecom Software Energy & Utilities Computer Hardware & Services Healthcare Industrial Automotive & Transportation Business Products & Services Consumer Products & Services Electronics Environmental Services & Equipment Financial Services Food & Beverages Leisure Media Metals & Mining Retail Risk & Security
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So Much for VCs Going on Vacation in December

VCs ended the year strong with 264 deals. Every month of 2011 had more than 200 deals and $2.2B invested marking a pretty consistent rate of activity for the full year.
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The Series B and C Crunch? Yeah, Thats Looking Likely

Seed and Series A were almost 50% of deals making Series B and beyond a potential chokepoint for many companies raising early stage money.
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Healthcare Deals and Dollars Show Some Life

After a three quarter slide on deals, healthcare investment regained in Q411. Mobile remained strong on both deals and dollars for a 2nd straight quarter.
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11
Q4 2011 Venture Capital
INTERNET
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12
Internet Investment Comes Back to Earth After Torrid Q3

Internet
Web companies took over $10.5B of venture funding in 2011 representing over 1/3 of total VC investment.
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13
Cali Dominates Net Deals & Dollars and NY Solid at #2

Internet
NYs thriving internet ecosystem holds strong and nearly doubles Mass on # of deals. Washington DC shows strength on dollars on back of LivingSocial mega-deal.
Quarter Highlights
283 deals | $2,514M
Top Deals
Dropbox LivingSocial WhaleShark Media Box.net
Top Cities
San Francisco, CA 53 deals | $564M New York, NY 40 deals | $362M Washington, DC 6 deals | $207M Austin, TX 5 deals | $164M Palo Alto, CA 11 deals | $147M Redwood City, CA 7 deals | $146M Mountain View, CA 10 deals | $89M San Mateo, CA 5 deals | $85M Boston, MA 6 deals | $69M Burlingame, CA 2 deals | $46M
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Deal/Dollar Share In Line With Historical Levels

Internet
NYs ascent of Q311 didnt continue, but the state still was the clear #2. Massachusetts falls to 5 quarter low on share of internet deals.
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15
Seed and Series A Momentum Stays Strong

Internet
Seed deals in web companies maintained record levels, and Series A showed an uptick. Series B and C deals both declined on deal share.
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16
Dropbox and Box.net Garner Data Storage Big Dollars

Internet
Deal and dollar distribution remains diverse with some new areas like business intelligence, analytics and video showing deal strength.
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17
Internet Medians Drop Across the Board

Internet
While not dramatically declining, the internet sector did see median deal values drop across-the-board on a sequential basis.
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18
HEALTHCARE
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19
What Healthcare VC Decline?

After three quarters of declining deal volume, healthcare re-emerged with strong dealflow and the highest venture funding tally of the last five quarters.
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Healthcare
20
California and Massachusetts combine for 50% of deal share and 67% of dollars. The rest of the field is fragmented as is typical.
Quarter Highlights
172 deals | $1,895M
Top Deals
Portola Pharmaceuticals Agios Pharmaceuticals Rempex Pharmaceuticals Sensors for Medicine & Science Dermira Cleave Biosciences
Top Cities
Cambridge, MA 13 deals | $262M San Diego, CA 14 deals | $172M South San Francisco, CA 3 deals | $106M Boston, MA 4 deals | $80M Redwood City, CA 2 deals | $74M Germantown, MD 1 deals | $54M Irvine, CA 3 deals | $51M New York, NY 3 deals | $47M Watertown, MA 4 deals | $44M Burlingame, CA 1 deals | $42M
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Healthcare
Mass and Cali Retain Dominance of Healthcare Sector
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Overall, venture deal and dollar share stays within its historical bounds.
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Healthcare
Cali Slides to Five Quarter Low on Deal Share
22
Healthcare VCs committed significant deal volume and funding to Series A deals. Series B was weak on both fronts. Is a Series B crunch which is discussed on the tech front also going to hit healthcare?
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Healthcare
Healthcare Sees Series A Deals Win the Quarter
23
Medical devices continue their leading position for deals and dollars within the Healthcare sector, followed by strong quarters for both Pharma and Biotech.
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Healthcare
Medical Devices, Pharma and Biotech Rule Q4
24
Across all stages, medians declined. Funding strength in healthcare in Q411 driven by healthy deal volume.
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Healthcare
Healthcare Medians Come Down Across the Board in Q4
25
GREEN & CLEAN TECH
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26
Green Tech Deals and Dollars Maintain Levels

Green
Q4 sees funding levels exceed $1B in Q411 and in-line with Q311. Relative to Q410, deals were up 17% and funding was up 62%.
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27
Texas Green Tech Deals Down but Funding Share Way Up

Green
Cali remains the overwhelming leader in terms of Green Tech deals and dollars. Texas shows funding strength on back of large Green Tech investment into
Quarter Highlights
69 deals | $1,281M
Top Deals
Better Place Stion Soraa eRecyclingCorps
Top Cities
Irving, TX 2 deals | $206M Palo Alto, CA 1 deals | $200M San Jose, CA 2 deals | $145M Sunnyvale, CA 5 deals | $97M Fremont, CA 3 deals | $68M Tucson, AZ 1 deals | $50M Westborough, MA 2 deals | $31M Orem, UT 1 deals | $30M Ashland, OR 1 deals | $28M Santa Monica, CA 1 deals | $27M
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Cali and Texas Take 75% of Green Tech Dollars

Green
Deal share across states remains consistent. Mega-deals in Cali and Texas have them eating up most of Green Tech funding in Q4.
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29
Early Stage Green Tech Deals Hit 5-Quarter High

Green
After Q311s early stage investment beatdown, Q411 sees a resurgence with 40% of deals going to Seed and Series A.
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30
Renewables Hits Five Quarter Low on Deal Share

Green
Renewables retains top spot, but sees new 5-quarter low in terms of deal share. Energy Efficiency technology has a strong quarter with a number of smaller deals.
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31
Green Tech Median Deal Values Generally Decline

Green
Overall and across most stages, median deal values dropped with the exception of Series D. The reduction in investment in renewables helped to drop medians across the board.
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CALIFORNIA
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The Golden State Steady as Ever

California
California stays within its recent historical ranges on both deals and dollars. Versus Q410, deals were down 3% and funding was up 45%.
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35
Mega Deals Across Sectors Maintain Funding Balance

On the deal side, Internet and Healthcare combine for 57% of deal share.
Quarter Highlights
300 deals | $3,836M
Top Sector
# of Deals Internet $ of Funding Internet
Top Deals
Dropbox Better Place Stion Prysm Portola Pharmaceuticals
Top Cities
San Francisco 80 deals | $818M Palo Alto 29 deals | $529M San Jose 12 deals | $355M Redwood City 12 deals | $313M Fremont 7 deals | $212M San Diego 19 deals | $195M Sunnyvale 10 deals | $143M Mountain View 15 deals | $124M South San Francisco 5 deals | $121M Menlo Park 13 deals | $119M
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California
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Healthcare Gains Modestly on Deals & Dollars in Cali

California
No violent shifts in deal or funding share for Cali during Q411. Quarter continued demonstration of Calis balanced VC landscape.
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Early Stage Dealflow Hits Five Quarter High

California
Seed and Series A grow in number hitting 45% of deals. Series B and beyond comparable to prior quarter ranges on both deals and funding.
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38
MASSACHUSETTS
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39
Patriot Nation Hits Five Quarter High on Deals

After Q311s blah funding total, Q411 registers a 35% sequential increase and 52% year over year increase on funding. Deals were up 12% sequentially and 19% year over year.
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Massachusetts
40
Healthcare Wins on Both Deals and Dollars in Mass

Healthcare activity in Mass stays strong. Internet took back the #2 spot for funding from Energy.
Quarter Highlights
93 deals | $959M
Top Sector
# of Deals Healthcare $ of Funding - Healthcare
Top Deals
Agios Pharmaceuticals Rapid7 Cyber-Ark Software Zink SAGE Therapeutics
Top Cities
Cambridge 27 deals | $312M Boston 16 deals | $169M Waltham 10 deals | $123M Newton 6 deals | $83M Westborough 5 deals | $47M Watertown 4 deals | $44M Bedford 1 deals | $35M Charlestown 1 deals | $18M Southborough 1 deals | $17M Woburn 2 deals | $16M
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Massachusetts
41
Internet Deals Hit Five-Quarter Low in Mass

Four out of ten deals and one out of two VC dollars in Mass went to healthcare companies. Internet deal share hits a low watermark.
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Massachusetts
42
Early Stage Hits 5-Quarter High in Massachusetts

Seed and Series A combine for 42% of deals tying with levels seen in Q211. Larger Series A deals primarily in healthcare drove funding share of Series A rounds to highest level in five quarters.
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Massachusetts
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NEW YORK
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44
After a breakout Q311 where NY took the #2 spot for overall VC, NY dipped but remained strong still ahead on both deals and dollars vs. Q410.
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New York
As the Jets Go, So Does New Yorks VC Scene?
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Internet continues to command the lions share of deals and dollars, but Mobile deals register volume and Healthcare consumes serious dollars in Q4.
Quarter Highlights
73 deals | $568M
Top Sector
# of Deals Internet $ of Funding - Internet
Top Deals
Fab.com Imagen Biotech Outbrain Knewton
Top Cities
New York 61 deals | $491M Buffalo 2 deals | $37M Ithaca 3 deals | $28M Brooklyn 5 deals | $7M Highland 1 deals | $4M
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New York
Internet Still Rules, but Mobile and Healthcare Show Life
47
Mobile deals see a jump in Q4, reclaiming share of deal volume experienced in Q2. Healthcare experiences 5-quarter high in terms of dollar share.
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New York
Internet Share Shrinks in Terms of Both Deals and Dollars
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Following two relative weak quarters, early stage reclaims share in NY with Seed/Series A commanding 60% of deal volume and nearly 40% of investment in Q4.
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New York
NY Early Stage Experiences Considerable Jump in Q4
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WASHINGTON
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50
Venture deal volume in Washington was down for a third straight quarter, while investment dollars fall substantially after showing some pep in Q3.
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Washington
In Q4, Washington Fails to Build on Recent Momentum
51
Internet and Healthcare split venture investment dollars fairly evenly, while Mobile convincingly occupied the third spot.
Quarter Highlights
24 deals | $146M
Top Sector
# of Deals Internet $ of Funding - Internet
Top Deals
NanoString Technologies adSage RedFin Zaarly DreamBox
Top Cities
Seattle 15 deals | $92M Bellevue 3 deals | $32M Redmond 2 deals | $8M Bothell 1 deals | $8M Issaquah 1 deals | $3M Kirkland 1 deals | $2M
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Washington
Internet and Healthcare Continue to Dominate in Washington
52
Healthcare continues its tear, as both deal volume and investment dollars grow share for the third straight quarter. Could it unseat Internet for top spot in the near future?
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Washington
Healthcare Grows Share for Third Straight Quarter
53
Seed maintains its share of deals while Series A quadruples its share of deal volume versus Q3. Early stage commands nearly 60% of overall deal volume.
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Washington
Early Stage Investing Roars Back in Washington
54
TEXAS
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55
Texas experiences a substantial dip in deal volume in Q4, but investment dollars pop on the backs of large deals.
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Texas
Dollars Up, Deals Down in the Lone Star State
56
Texas maintains sector diversity in Q4 in terms of deal volume, with Energy taking a distant fifth seat. Mobile & Telecommunications swallows over half of dollars invested.
Quarter Highlights
24 deals | $476M
Top Sector
# of Deals Internet $ of Funding Energy & Utils.
Top Deals
WhaleShark Media eRecyclingCorps Xtera Communications Inova Labs MedMark Services
Top Cities
Austin 13 deals | $208M Irving 2 deals | $206M Allen 1 deals | $30M Lewisville 1 deals | $11M Dallas 3 deals | $11M San Antonio 1 deals | $4M Houston 2 deals | $4M Richardson 1 deals | $2M
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Texas
Energy Takes a Back Seat; Mobile Owns 50%+ of Dollars
57
Only a quarter after owning more than one-third of venture dollars invested in Texas, Energy falls off the map. Mobile explodes; Internet also grows share.
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Texas
Energy Investment Dollars Disappear in Q4
58
Early Stage Investment Regains Momentum in Texas

Seed VC deal volume comes back down to earth, but Series A explodes as early stage commands 43% of overall deal volume.
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Texas
59
Definitions Ensuring Data Integrity

Whats Included in our Quarterly Venture Capital Numbers? What is not?
Given the importance of venture capital in spurring innovation and entrepreneurship, measuring venture capital activity accurately is important. We encourage you to review the methodology and definitions employed by us to better understand the numbers presented in this report. If you have any questions about our definitions or methodological principles, we encourage you to reach out to us directly.
What is included?
Equity financings into emerging companies. Funding must come from venture capital firms including corporate venture groups. Fundings of only private companies. Public companies of any kind on any exchange (including Pink Sheets) are excluded from our numbers even if they received investment by a venture firm(s) Companies must be headquartered in the USA. Our geographic data is based on the city and state where the company receiving investment is headquartered. If a company has a satellite office/presence in multiple cities or was founded in a particular city but has moved its HQ, our results reflect only this HQ address. Only include the investment made in the quarter for tranched investments. If a company does a second closing of its Series B round for $5M and previously had closed $2M in a prior quarter, only the $5M is reflected in our results. Round #s reflect what has closed not what is intended. If a company indicates the closing of $5M out of a desired raise of $15M, our numbers reflect only the amount which has closed. Only verifiable fundings are included. Fundings are verified via (1) various federal & state regulatory filings (2) direct confirmation with firm or investor or (3) press release. Funding close date matters. Fundings are provided based on funding close date and not on announcement date.
What is excluded?
Angel investment. These are not included in numbers unless an investment round included Angels investing alongside a venture capital firm or corporate venture group. No contingent funding. If a company receives a commitment for $20M subject to hitting certain milestones but first gets $8M, only the $8M is included in our data. No business development/R&D arrangements whether transferable into equity now, later or never. If a company signs a $300M R&D partnership with a larger corporation, this is not equity financing nor is it from venture capital firms. As a result, it is not included. Buyouts, Consolidations and Recapitalizations. All three of these of transaction types are commonly employed by private equity firms and are tracked by CB Insights. However, they are excluded for the purposes of this report. Private equity investments into companies which may have received venture capital investment prior are also not included. Private placements. These investments also known as PIPEs (Private Investment in Public Equities) even if made by a venture capital firm(s) are not included. Debt/loans of any kind. Venture debt or any kind of debt/loan issued to emerging, startup companies even if included as an additional part of an equity financing is not included. If a company receives $3M with $2M from venture investors and $1M in debt, only the $2M is included in these statistics. Government funding. Grants, loans, equity financings by the federal government, state agencies or public-private partnerships to emerging, startup companies are not included. Strictly venture or corporate venture outfits. Incubator investments. Investments of money as equity or debt and/or services by incubators are not included. Strategic corporate investments. Corporations making strategic investments in companies but not as part of a specific organized venture group are not included.
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Venture Capital Activity Report | Q4 2011

DEFINITIONS & DATA INTEGRITY

Venture Capital Activity Report | Q4 2011

Q4 2011 This Quarter in Venture Capital

Venture Capital Activity Report | Q4 2011

$7.6B over 755 Deals Q4 Continues 2011s Torrid Pace

Venture Capital Activity Report | Q4 2011

Back to Reality? Mass Deal Share Eclipses NY

Venture Capital Activity Report | Q4 2011

Cali Dominates. Mass & Cali Take 65% of VC Dollars

Venture Capital Activity Report | Q4 2011

82,000+ Private Company Profiles.

From Angel to Private Equity.

Company & Investor Updates via Email.

Management & Board Information

Analytics & Reporting

Venture Capital Activity Report | Q4 2011

So Much for VCs Going on Vacation in December

Venture Capital Activity Report | Q4 2011

The Series B and C Crunch? Yeah, Thats Looking Likely

Venture Capital Activity Report | Q4 2011

Healthcare Deals and Dollars Show Some Life

Venture Capital Activity Report | Q4 2011

Get Started for Free with CB Insights

Venture Capital Activity Report | Q4 2011

Q4 2011 Venture Capital

Venture Capital Activity Report | Q4 2011

Internet Investment Comes Back to Earth After Torrid Q3

Venture Capital Activity Report | Q4 2011

Cali Dominates Net Deals & Dollars and NY Solid at #2

Venture Capital Activity Report | Q4 2011

Deal/Dollar Share In Line With Historical Levels

Venture Capital Activity Report | Q4 2011

Seed and Series A Momentum Stays Strong

Venture Capital Activity Report | Q4 2011

Dropbox and Box.net Garner Data Storage Big Dollars

Venture Capital Activity Report | Q4 2011

Internet Medians Drop Across the Board

Venture Capital Activity Report | Q4 2011

Q4 2011 Venture Capital

Venture Capital Activity Report | Q4 2011

What Healthcare VC Decline?

Venture Capital Activity Report | Q4 2011

Mass and Cali Retain Dominance of Healthcare Sector

Venture Capital Activity Report | Q4 2011

Cali Slides to Five Quarter Low on Deal Share

Venture Capital Activity Report | Q4 2011

Healthcare Sees Series A Deals Win the Quarter

Venture Capital Activity Report | Q4 2011

Medical Devices, Pharma and Biotech Rule Q4

Venture Capital Activity Report | Q4 2011

Healthcare Medians Come Down Across the Board in Q4

Venture Capital Activity Report | Q4 2011

Q4 2011 Venture Capital

GREEN & CLEAN TECH

Venture Capital Activity Report | Q4 2011

Green Tech Deals and Dollars Maintain Levels

Venture Capital Activity Report | Q4 2011

Texas Green Tech Deals Down but Funding Share Way Up

Venture Capital Activity Report | Q4 2011

Cali and Texas Take 75% of Green Tech Dollars

Venture Capital Activity Report | Q4 2011

Early Stage Green Tech Deals Hit 5-Quarter High