In April, May, and June, U.S. venture capital investment had its worst quarter--in both number of dollars and deals--since 2010, according to the Dow Jones VentureSource quarterly report released yesterday.
Overall in the second quarter, 801 U.S. companies raised $7.2 billion in venture capital money. That was down 2 percent in dollar terms, and 0.5 percent in number of deals completed, compared to the first quarter of 2013.
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VC investment in the second quarter of 2013 was also lower than the second quarter of 2012, when venture capital firms invested $8.91 billion in 959 companies; it was down 19 percent in dollar terms and 16 percent in number of deals.
The second quarter $7.2 billion in VC investment was the smallest total sum since 2010, when VCs invested $5.3 billion and $6.1 billion in the first and third quarters, respectively, according to Dow Jones analysis.
Still, there were some notable VC deals in the period, and they were by no means confined to Silicon Valley.
The $321 million face of Fab's Jason Goldberg. Fab raised the largest venture round of Q2 2013 (Click Image To Enlarge)
Startups raising the most VC funding during Q2 2013 were:
- Fab.com in New York, a flash sale site that offers indie designer housewares, accessories, clothing, and jewelry, raised $150 million--the largest transaction of the quarter.
- Acumen Brands, a Fayetteville, Arkansas based online retailer that sells outdoor apparel, work wear, and medical scrubs, raised a $83.16 million VC investment,
- TOA Technologies, an Ohio-based developer of mobile workforce management software raised $66 million.
Two big deals, tied for the fourth-highest VC financing at $70 million each, were located in the San Francisco Bay Area:
- Twilio, a San Francisco startup which helps developers incorporate text messages and other phone services into apps.
- Alvine Pharmaceuticals, a biotechnology company in San Carlos, California that is focused on autoimmune and inflammatory diseases.
The five most active American VC investors in Q2 2013 were:
- 500 Startups with 25 deals.
- New Enterprise Associates with 17 deals.
- Andreessen Horowitz (which invested in Fab.com) with 17.
- Google Ventures with 16 deals.
- USVP Management Company with 14 deals.
In terms of VC financings by industry, most sectors saw an increase in amount raised, with the two largest allocations to the following industry sectors:
- Information technology with 238 deals, raising a total of $2.1 billion and representing 29 percent of total equity investment during the quarter.
- Health care the second-largest sector, saw 168 deals raising a total of $1.9 billion, but dipped 8 percent from the previous quarter.
At the same time, the Dow Jones VentureSource report found venture capital firms are raising sizeable funds to invest going-forward. In total, VCs raised 50 funds at a total of $6.8 billion in the second quarter of 2013, a 48 percent increase compared with the first quarter of 2013. The first half of the year was up 4 percent compared to the same period in 2012.
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Though there were fewer acquisitions of VC-backed companies than in any quarter since 2009, with 84 completed deals at a total of $8 billion in the second quarter of 2013, there were some memorable pairings.
- Google's acquisition of Waze, a social-based traffic and navigation app that allows users to share real-time info with one another was the largest acquisiton at $1.3 billion
- AstraZeneca's purchase of Pearl Therapeutics, which develops treatment therapies for respiratory diseases, was second with $1.15 billion.
- Yahoo's $1.1 billion acquisition of Tumblr in May was the third largest.
COMMENTARY: Although the number VC financing deals and total amount funded was the lowest since 2010, there is hope for the future, because VC firms raised 48% more new capital for their investment funds than they did in Q1 2013.
The largest IPO of the second quarter (in June), was Gogo, a provider of in-flight web services, floated 11 million shares at $17 apiece and raised $187 million. Tableau, a cloud analytics software provider raised $55 million in their May IPO.
Again, as in previous quarters, Silicon Valley led all geographic regions for venture capital fundings.
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And the San Francisco Bay Area led other major metropolitan regions by a country mile during Q2 2013.
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Series A and Series C rounds raised the most venture capital during Q2 2013.
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Courtesy of an article dated July 19, 2013 appearing in INC
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