VC hits highest levels since Dot Com days. Mobile, internet, seed VC all up. Healthcare, greentech and Massachusetts languish.

812 companies received $8.1B of financing in Q2 2012 removing any thoughts that VCs were taking a break because of concerns about the IPO or exit markets or larger economic uncertainty.

This represents a 37% increase in funding and 3% increase in deals vs. the prior quarter. On a year over year basis, funding and deals were up 5% and 4% respectively. Deal activity which we continue to view as the best gauge of investor sentiment remains strong. The pace of deal making coupled with mega deals especially in green tech helped to dial up funding in a big way.

quarterly venture capital trend

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A Changing of the Guard – Is NY the New #2 Overall?

While NY’s ascent in tech VC has been something we highlighted some time ago, this quarter marked the 2nd straight quarter in which NY exceeded Massachusetts on overall VC deal volume. On the funding front, Mass continues to retain the #2 position.

Seed VC Investing Hits All-Time High

More than 1 out of 5 VC deals this quarter were seed investments. These “call options” as we’ve referred to them in the past made up 31% of all internet deal and 34% of all mobile sector deals. Seed VC deals have been hot for a while, but the level of activity at this stage has accelerated steadily since Q1 2011.

Mobile Deals Hit All-Time High. Herd Mentality?

Without being too self-congratulatory, the Instagram Effect we speculated about in Q1 2012 seems to have taken shape as the mobile sector saw 102 deals, an all-time high. Photo and video related companies took home almost 30% of the funding in mobile evidencing more opportunity in those areas. For skeptics, it may also be indicative of a VC herd mentality. Time will tell.

Green Tech Mega Deals Don’t Mask Sector’s Issues

Big deals to Fisker, Bloom Energy and Sapphire inflate funding to a five quarter high while deal volume fell to a five quarter low having fallen 37% vs. last year.  Renewable energy, green tech’s typical go-to industry, fell below 30% of deal volume for the first time suggesting the sector remains in flux.

Internet Sector Hits Five-Quarter High

Seed deals bolster internet sector’s deal volume while mid and later-stage deals buoy funding levels.  Cali and NY becoming two-headed monster on the internet front (with Cali, of course, dominating).  Social takes backseat to ed tech, e-commerce apparel and enterprise technology plays.

Healthcare VC on Life Support

Bad healthcare puns aside, the trend for healthcare VC is not a great one. Deals hit a five quarter low while funding rebounded modestly from the Q1’12 lows.

Mass VC Malaise Spreads to Healthcare Too

Although healthcare deals were down overall, Massachusetts share of deals and dollars to the healthcare sector fell more than industry levels.  For healthcare, Mass was only 13% of deals and 15% of funding – both five quarter lows.

Washington Gets Some Love

Washington state hits a five quarter high on both deals and funding. Year over year, dollars and deals were up 136% and 10% respectively. On a sequential basis, funding climbed 51% and deals jumped 14%. Strong performance by healthcare and internet sectors help Washington’s Q2 2012 performance.

Cali – The Beat Don’t Stop

The Golden State juggernaut rebounds nicely in Q2. Takes 45% of deals and 58% of funding (both five quarter highs). Versus Q1’12, Cali’s funding was up 64% and deal were up 17%. On a YoY basis, funding to Cali companies was up 28% and deals grew 6%.