Venture Capital Investing Hits Six-Year High
Venture capital investing hit a six-year high in 2007 at $29.4 billion, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association, based on data from Thomson Financial. Tracy Lefteroff, Global Managing Partner of the Venture Capital Practice at PricewaterhouseCoopers LLP, concludes, “Four straight $7 billion plus quarters is a clear indicator that VCs have a positive outlook on their investing opportunities, and that means good things for entrepreneurs looking for funding. And, with the large number of Later Stage companies receiving investments, it appears that VCs are banking on the markets to stay active throughout 2008.”
The report also finds that the increase in investments can be largely attributed to record investment levels in the life sciences and clean technology sectors. Executive recruiting firm, A.E. Feldman says the trend is increasing demand for talent. The surge in investment, here in the U.S. and overseas, is creating venture capital opportunities. Green tech and clean tech companies are on the radar screens of venture capitalists. One industry veteran and management consultant working with A.E. Feldman said, “There is a big rush of people and money into this area. It’s still very early, but interest in alternative energy is absolutely growing and attention to the sector will only increase.”
The venture capital invested in 2007 represents a nearly 11% increase in dollars and a 5% percent jump in deal volume over 2006, according to the MoneyTree report. Later Stage investments experienced the most dramatic increase during the year. Meanwhile, first-time financings reached a six-year high as venture capitalists placed more initial bets in companies across multiple sectors.
Mark Heesen, President of the National Venture Capital Association, said, “The annual increase in venture capital investment in 2007 was extremely rational as the industry is now investing in a mix of sectors that is much more capital intensive than it has been in the past.” Heesen also says that single digit increase in deal volume suggests that a fair amount of discipline is being applied to investment decisions.
The Life Sciences sector (which includes biotechnology and the medical device industry) set an all-time record for venture capital investing in 2007 with $9.1 billion in 862 deals, compared to $7.6 billion going into 786 deals in 2006, according to the MoneyTree report.
Concerns about the environment and climate change have prompted investors to believe that alternative energy companies and others in similar fields could also be hot tickets. The report indicates that the Clean Technology sector (which encompasses alternative energy, pollution and recycling, power supplies and conservation) also experienced significant growth last year with $2.2 billion invested in 202 deals (including two of the five biggest deals of the year).
Overseas, U.S.-based venture capitalists invested $1.1 billion in 91 deals in India and $1.4 billion in 133 deals in China, finds the MoneyTree report. This boom in investment represents all-time highs for U.S. investments in each country.
