Venture capitalists from around the world invested $7.8 billion in 995 deals for companies based in the U.S., Europe, Canada, Israel, Mainland China and India, according to industry tracker Dow Jones VentureSource. This is a slight decrease from $7.9 billion put into 1,025 deals during the same period last year.
“Venture investment in some major investment hubs, such as Europe, has not regained its footing following the economic downturn in 2008. However, in other regions, such as the U.S., the dip in capital invested but rise in deal flow is a sign of health as investors return to funding more early-stage deals,” said Jessica Canning, global research director for Dow Jones VentureSource.
Europe Sees Lowest Deal Count on Record
Venture capitalists put $1.2 billion (Euro 916 million) into 198 deals for European companies in the third quarter of 2010. This is the lowest quarterly deal count for Europe since Dow Jones VentureSource began tracking the region ten years ago and represents a 25% drop in deal flow from 263 deals in the third quarter of 2009.
“Fears about long-term sustainability, coupled with uncertainty surrounding the European Union’s new Alternative Investment Fund Managers directive – expected to be rubber-stamped by the European Parliament this month – have focused the European venture capital industry on a smaller number of key deals in core industries such as Healthcare and on later-stage deals, leaving less for investments in new enterprises,” said Arno Castanet, research manager, Dow Jones VentureSource.
Healthcare remained the largest industry, collecting $483 million (Euro 378 million), while the Consumer Services industry, driven by investment in Web companies, overtook Information Technology (IT) as the second-largest industry.
For a detailed venture financing report on Europe, visit http://bit.ly/a8VXIE.
Asia: China Sees Record Low Investment in IT; Services Remain Biggest Draw in India
Venture investment in Mainland China during the third quarter rose 32% over the same period last year to $603 million for 64 deals. Thirty-four percent of venture capital investment went to Business and Financial Services companies, which claimed $202 million for 18 deals. Traditionally one of the stronger areas of investment in China, the IT industry reached a record low with $46 million invested in eight deals, a 52% drop of capital invested from the same period last year. VentureSource has been tracking the region since 2005.
In India, venture capitalists invested $198 million in 25 deals, a 24% increase from the $160 million put into 17 deals during the same period last year. The Services industries continued to attract the most investment as Business & Financial Services companies collected $49 million for seven deals and Consumer Services companies garnered $71 million for nine deals during the third quarter of 2010.
Israel: Investment and Deal Activity Declines
In the third quarter of 2010, investors put $124 million into 19 Israel-based companies, down from the $237 million invested in 35 companies during the same period last year. This represents an 18% drop in capital invested and a 26% decline in deal activity from the year-ago period.
North America: U.S. Sees More Deals, Fewer Dollars; Investment in Canada Ahead of 2009 Totals
Venture investors put $5.5 billion into 662 deals for U.S.-based companies during the third quarter of 2010, a 5% drop in investment but a 2% increase in deals from the same period last year, according to Dow Jones VentureSource. Despite the investment drop during the most recent quarter, $18 billion was put into 2,016 deals during the first three quarters of 2010, a 10% increase in both investment and deal activity over the same period last year. A detailed report of U.S. venture financing is available at http://bit.ly/9d6u7w.
In the first three quarters of 2010, Canadian companies closed more deals and raised more capital from venture investors than in all of 2009. Through September 2010, Canadian companies raised $585 million for 76 deals. In the third quarter alone, 27 deals raised $186 million, a significant increase from the same period last year when 13 deals garnered $121 million. IT companies claimed the majority of investment in the third quarter, collecting $111 million for 13 deals.
Median Deal Sizes Up In All Venture Hubs
Mainland China and India saw increases in median deal sizes. In China, the median deal size during the third quarter of 2010 jumped 28%, from $5.4 million in 2009 to $7.4 million in the most recent quarter. In India, the $8.7 million year-to-date median was more than double the $4.1 million median seen in 2009.
In North America, the U.S. saw a median deal size of $5 million, on par with the same period last year. Canada’s year-to-date median deal size was $4.8 million, up slightly from the 2009 median of $4.4 million.
In Europe, the median deal size increased from $2.1 million during the third quarter of 2009 to $2.6 million in the most recent quarter.
For information on Dow Jones VentureSource’s research methodology, visit http://bit.ly/VSFAQs.
For general information about Dow Jones VentureSource, visit http://www.dowjones.com/privatemarkets.
*All investment figures are converted to USD using the exchange rate on the first day of the month in which the round closed.
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