Can Groupon’s Momentum Help Turn Chicago, Illinois Into Venture Capital’s Next Big Destination?

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In our recent weekly dealflow reports, we’ve noted on multiple occasions that Illinois has been breaking into the ranks of the top five on a dollars invested or deals basis.  The top 3 spots, of course, remain locked up by the tri-fecta of California, Massachusetts and New York.  The expected four and five spots typically go to some combination of Texas, Washington, New Jersey or Colorado.  But those expected areas have been unsettled by Illinois on at least a couple of occasions in the recent past.

Interestingly, CB Insights’ data for Illinois’ shows the jumps in investment activity has not been relegated to a couple of isolated weeks.  The last four quarters including Q2 2010 results-to-date are showing a steady climb in investment deals and dollars.  Of course, recent figures reflect Groupon’s significant investment rounds, but the strength in dollars and deals goes beyond just Groupon.

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Are Mid- and Later-Stage Internet Deals Really Where It’s at for Venture Capitalists?

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While early-stage venture capital internet deals get their share of attention, and activity has stayed healthy, the trend over the last five quarters shows that as a % of total internet deals, venture capital deals in mid- and late-stage internet companies are trumping their early-stage brethren.  While the % of deals in early-stage has stayed within a tight range, Q1 2010 was the lowest percentage in five quarters going back to Q1 2009′s venture capital activity.  (Note: Early stage is defined as those investments by firms into companies which are young and which have not received institutional funding before)

The trend over the last five quarters leveraging CB Insights’ deal data can be seen below.

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Private Company Financing Dealflow – 127 Companies Raise $388.7M (Week of May 22, 2010)

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Private company financing maintained a high level of activity with strong deal volume but funding for the week dropped below $400 million.  California has retaken the top spot, and was followed by New York and Massachusetts in both deals and funding.  Texas and Colorado rounded out the top five states, with Colorado hitting its own twelve week high.  Interactive charts on the past week’s dealflow are below (may take a second to load). To see profiles on the private companies receiving funding in the last week, logon to CB Insights.

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Venture Capital Investment in Internet Search Dwarfs Mobile Search from 2005-2009

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Despite optimism and the promise of mobile software and services, venture capital investment in search remains heavily skewed in favor of internet search.  A review of investment deal data in internet and mobile search over the period from 2005-2009 shows that at its highest, mobile search deals represent no more than 14% of the total number of search deals.

The trend over the 2005 to 2009 period can be seen below.  If you believe Steve Jobs, investment in mobile search may never happen.  In early April, Jobs commented:

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Austin, Texas – Venture Capital’s Top 10 Lone Star

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The list of cities that receive the most venture capital is typically dominated by several cities in California and also features Cambridge, Massachusetts and New York, NY.  These cities are the unsurprising usual suspects.  At times, other cities make their way in but one city outside of the big 3 states that consistently appears on the top 10 cities of venture capital is Austin, Texas.  In fact, on a number of venture capital deals basis, Austin ranked 4th in Q1 2010.

Austin’s venture capital strength comes on the back of diversity from both a sector and stage of investment perspective.  The below graphs break down the city’s venture capital statistics by sector and series of investment.

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Private Company Financing Dealflow – 138 Companies Raise $540.2M (Week of May 15, 2010)

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Private company financing had another strong week as deal volume hit a twelve week high and funding exceeded $500 million.  May funding has already eclipsed April by $200 million.  Massachusetts took over the top spot in funding for the week as California had one of its lowest funding weeks of the year.  The strong funding for the week was also supported by deals in Utah and North Carolina, which took the number three and four positions.  Interactive charts on the past week’s dealflow are below (may take a second to load). To see profiles on the private companies receiving funding in the last week, logon to CB Insights.

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Southern California’s Venture Capital Activity Exceeds New York and Rivals Massachusetts. Not All About Silicon Valley.

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There is consistent discussion and often lively debate about California’s venture capital activity versus the activity of the typical #2 and #3 states, Massachusetts and New York, respectively.  A great deal of this discussion tends to discuss California as if it is a single monolithic market with the underlying implied assumption that California = Silicon Valley.  Of course, Silicon Valley does dominate nationally and globally, but CB Insights’ data about Southern California’s venture capital activity indicates that the region’s venture capital tallies are far from immaterial.  In fact, SoCal beats New York on a dollars and deals basis and comes very close to the venture capital levels seen in Massachusetts.  (Note:  Southern California’s venture capital activity includes deals done in the counties of Los Angeles, Riverside, San Bernardino, Orange and San Diego.)

On a dollars basis, SoCal’s 2009 venture capital activity was more than double the dollars that New York saw in 2009.  And Southern California’s venture capital haul in 2009 was only 2% less than Massachusetts, the perennial #2.

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Venture Capital’s Four Horsemen of Internet Software and Services

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Of all sectors receiving venture capital investment, the most diverse in terms of area of investment is undoubtedly the internet sector.  CB Insights breaks down the internet sector into ecommerce and software and services, and within internet software & services, we define 50 further sub-industries to allow our subscribers a great deal of granularity to identify companies of interest.  And even with our finely tuned slicing, we consistently see investment across all of these sub-industries from quarter to quarter.

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Private Company Financing Dealflow – 114 Companies Raise $521.9M (Week of May 8, 2010)

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Private company financing has come down from last week’s high but May remains strong seeing another week with funding exceeding $500 million.  At its current pace May will be the strongest month of the year in terms of funding to private companies.  The geographic breakdown of the week’s deals saw the usual suspects of California, New York and Massachusetts rounding out the top three positions with Illinois once again breaking into the top five. Interactive charts on the past week’s dealflow are below (may take a second to load). To see profiles on the private companies receiving funding in the last week, logon to CB Insights.

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1998-2009 Venture Capital Investments in Healthcare – VC’s Betting Increasingly on Medical Devices

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As we’ve noted for the last several quarters, venture capital investment in the healthcare sector has dominated receiving the most venture capital dollars and also representing a large number of venture deals.  But this has not always been the case and so we looked at venture capital investment in the healthcare sector from 1998 to 2009.

As can be seen in the graph of deal activity and dollars invested over that time period, the healthcare sector has shown a steady and consistent climb in venture deals and with the exception of 2009 which was universally bad across all sectors, the dollar value of deals has also steadily climbed.

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