Venture Capital Activity Report
| 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…..
bashful in Q4 2011 showering 755 companies with $7.6 billion in venture funding.
Q4’s performance brought2011’s 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 2011’s results, the bubble talk will shift into
overdrive. The reality is that VC funding is a funnel. Morecompanies get Series A than B than C
etc, etc. Withintech, our data shows the VC funnel has gotten fat at thetop (a lot of Series A and Seed deals). And VCDarwinism means that not all of these companies can orshould receive Series B, C, etc. While some would saythis 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 acq-hired or get dressed up as acquisitions, some will beorphaned and figure out a way to make money andbecome steady businesses and some will die a slower,more tortured death.
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 Q3’11, NY
slipped back to #3 behind Massachusetts. The stateretains its hold on #2 for tech deals and dollars and
showed some life in the healthcare realm as well. We’llsee if NY can fight back like it’s resilient football Giants or
whether the state will just talk incessantly and not performlike the Jets in future quarters.
Rumors of Death Greatly Exaggerated
Healthcare hit a five quarter high on funding and showedsolid deal activity. Sector reverses downward trend andshows pulse to close out 2011.
’ Balanced Attack Brings It Back to #2
Massachusetts took back its #2 spot for both deals anddollars with deals across multiple sectors. Healthcarewas particularly strong. Internet investment in the statewas 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 and66% of funding. Internet investments took over 1/3 ofventure dollars in 2011. Massachusetts fell to a fivequarter low on internet deal share. Mega-deals in thedata 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.
We’ll bring back our “Sleeping in Seattle” metaphor as
Washington continued its multi-quarter dealflow slide andalso 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.