2012 Venture Capital Activity Report

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Venture capital for 2012 hit $28.3 billion invested across 3267 deals. Funding was down 7.5% and failed to reach the $30 billion mark seen in 2011 ($30.6B) while deal volume climbed 7% from 2011 on the back of continued strong activity at the Seed VC stage (from 3051 to 3267 deals). Q4 2012 saw VC funding dip for the 2nd consecutive quarter as it fell back significantly from the heady $8.1B seen two quarters ago in Q2 2012 and the $7.5B seen in Q3 2012.  On the deal activity front, Q4 maintained the record-setting pace seen in Q3 ending at 834 financings (compared to 835 in Q3).

Seed VC which hit record levels in Q3 2012 fell back a bit in Q4 but remained strong.  While the Series A Crunch drama may be on seed investors’ minds, Q4’12 was still the second highest quarter for seed deals.  Q1 and Q2 2013 will be the quarters we’ll look to see if the Series A Crunch talk has really spooked Seed VC investors.

What Series A Crunch

Series A deals see the highest percentage of VC funding in the last five quarters.  As we detailed in our Series A Crunch report, Series A levels have stayed steady and actually climbed a bit over time so this is not entirely surprising.

I Got Some Money in My Pocket Going Jing Aling Aling

New Enterprise Associates leads all VCs as most active investor in 2012 putting some of its recent $2.5 billion fund to work.  The top 5 funds based on activity were rounded out by Kleiner Perkins, Google Ventures, Andreessen Horowitz and First Round Capital.  Note: The top 20 funds in terms of activity are detailed in the full report.

VCs Do Deals In Dec – Maybe You’re Just Getting Blown Off?

Conventional “wisdom” is that deals don’t happen in December but both 2011 and 2012 saw deal activity actually increase in December.  In reality, November seems to be the slow month.  Perhaps “December is slow” is just an easy way for VCs to nicely say “no thanks”.

38 States and Washington DC All See Some VC

Cali, Mass, NY, Washington and Texas remain the top 5 states for VC in Q4, but overall, 38 states got in on the VC action.  But as is typical, funding and deals remain concentrated in venture’s big markets.  Note: Deal activity by state are detailed in the entire report.

Healthcare Recovers

After languishing deal activity, Q4 2012 saw healthcare deal volume recover and funding levels hit a five quarter high.  Medical device firms remain the preferred area for VCs investing in healthcare.

Mobile Sector Continues to Get Love

The mobile sector saw a five-quarter high in deal activity.  Mobile CRM was the biggest area for deal activity with wireless technologies the winner on the funding front.  Mobile deal activity suggests it may be stealing share from internet-oriented deals.

Internet Sector Dips

Internet falters as Cali dips on deals and hits five-quarter low on funding.  Mass shows resurgence in internet deal activity as does NY.

Green Tech – A Mixed Bag

Deal activity climbs after three straight down quarters. Funding remains depressed with absence of mega-deals and negative sentiment hurting clean tech.

NY and Mass Both Gain Versus California

Deal activity and funding hit five-quarter highs for both NY and Mass while funding to Cali dipped to a five-quarter low.  Mass showed strength in both healthcare and internet.  New York saw over 100 deals in the quarter with mobile and internet-focused companies seeing almost 80% of both deals and funding.

The Washington Bump and the Texas Slump

Washington hits a five-quarter high on deals and sees an uptick on funding after Q3’s depressed levels.  Texas sees deals climb a bit but funding levels remain depressed.