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Q1 2011 registered $7.5B of venture capital funding invested in 738 deals (entire 63 page report is embedded below and is free to download). We’d said after Q4 2010’s venture capital performance that those of you looking for a data point that suggests VC is back would have some data to support your claim. We’d also said at the time that those of you who think things are getting bubblicious would have something to hang your hat on.
Q1 2011 numbers will likely reinforce whichever viewpoint you have as the quarter came in at pre-recessionary deal and funding levels. Given the $1B jump in funding over the prior quarter with a similar number of deals, it is also clearly a quarter driven by mega-financings in both internet and greentech companies as well as larger venture capital median deal sizes.
If the final two quarters of the year maintain similar funding levels, we could approach $29-$30 billion invested by VCs. Some pundits have suggested that the VC asset class’ “right size” is around $25 billion so it will be interesting to see if the momentum continues.
For access to company and investor profiles and the venture capital data for our Q1 2011 report, signup to CB Insights for free here.
NY Retains Spot as #2 for Tech Investment Over Massachusetts
In Q4 2010, we’d revealed that NY overtook Mass for tech VC dollars. While the trend hasn’t accelerated, the gap between the two tech VC hubs got slightly wider in Q1 2011. Over the last six quarters, NY has seen 261 tech deals vs. 250 for Massachusetts. Funding to NY tech companies came in at $1.60B vs. $1.44B for Massachusetts.
Early Stage Investment Stays Strong
Q1 2011 early stage deal and funding share remained consistent with Q4 2010. Seed VC still represented 10% of overall dealflow. Its consistency over the last 4 quarters suggests it may have found the right level of total VC deals (9-11%). Early stage deal activity was nearly 50% of total deals.
Green Tech / Clean Tech Gets Its Mojo Back
After three quarters of what can technically be called “blah” performance, green tech deals had a breakout quarter with deals and dollars up 45% and 145% respectively vs. Q4 2010. Cali consumed ¾ of the greentech funding on the back of mega-deals in a variety of areas including solar, software, electric vehicles and fuel cells. Greentech Seed VC deals ticked up nicely vs. Q4 2010 as well.
Groupon Halo Effect?
Illinois saw an increase in the number of web investments occurring in the area. The state has historically been a non-entity in deal activity rankings but has been showing increasing signs of life since Groupon-mania began.
Healthcare VC – Can’t Shake the Malaise
Deals in the Healthcare space were down 13% YoY while funding grew 11%. On sequential basis, deals and dollars have fallen in last 2 quarters. Mass and Cali continue to dominate share of Healthcare VC with Mass rebounding over Q4 2010 levels. Early stage activity in Healthcare drops to five quarter low.
California Knows How to Party
Yes – California dominated (yawn). Funding climbs 47% vs Q4 2010 and 32% vs. Q1 2010. Overall, Cali took 39% of deals and over 50% of funding. Deal count was down 7% sequentially and 3% YoY. Internet and healthcare deals stayed flat and funding dipped. Energy deals climbed with funding increasing significantly.
Texas Deals Down | Dollars Flat
Texas deals and dollar stay within the state’s historical range but deals dipped sequentially and year over year. Funding was up, however, vs. Q1 2010 and Q4 2010.
Washington At Five Quarter Low in VC Funding
Deal count in Washington grew 10% vs. Q4 2010 but funding remained at low levels seen in prior quarter. Over 50% of Washington deals were in early-stage companies and over 50% of deals were to Internet firms. The smaller checks for these financings resulted in Washington’s funding levels remaining low.
It’s worth noting what we included and what we didn’t as this quarter had some mega-deals which can and did greatly impact results. For example, the CB Insights database tracked Groupon’s mega $950 funding closing in two tranches. So $500M of it was included in Q4 2010 with the remainder being reflected in this report. Also, when non-VCs (mutual funds, hedge funds, etc) invest in internet companies for example, we do not include those rounds unless there is also a venture firm participating. As always, we recommend you also review our definitions and methodology on p. 61 to see what is included vs. what is not as there tends to be a fair amount of misinformation out there about venture data.