VC-backed IPOs hit a 5-quarter high spurred by healthcare companies. Funding levels were down 14% vs. last year and deal activity slipped after a steady uptick over the last 5 quarters.

Q2 2013 was a mixed bag for venture capital.  The exit environment showed some signs of life with twenty two venture capital-backed companies IPO’ing in Q2 2013.  This marked a five-quarter high for VC-backed IPOs.  But while IPOs were strong, M&A of venture-backed companies was weaker making the overall exit picture relatively weak.

On the financing front, the $7.0B invested in 807 deals in Q2’13 represented a decline in deals on both a sequential and YoY basis. Funding was up marginally from Q1’13 ($6.9B) but was down 14% vs. Q2’12 when funding came in at $8.1B. The Q1 to Q2 funding and deals bump seen last year didn’t make a repeat performance.

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Venture-backed IPOs hit a 5-quarter high with healthcare IPOs dominating…

The 22 VC-backed IPOs in Q2’13 represented 83% more than Q2’12 and a 144% increase vs. Q1’13. Growth was driven by 11 healthcare IPOs versus just 4 in Q1. Seattle-based Tableau Software, backed by NEA, saw the strongest Tech IPO offering of the quarter being valued at nearly $2B on the day of its offering.

…But overall, exits of VC-backed companies were modest

Overall, there were 127 VC-backed companies that exited in Q2’13 – 22 IPOs and 105 M&As. While IPO levels climbed, M&A activity was more measured making Q2’13 the 2nd lowest quarter for VC-backed exits in the last five. M&A transactions with disclosed valuations totaled $7.6B – the lowest aggregate value of M&A transactions in the last five quarters.

One way to beat the Series A Crunch

With concerns that many seeded companies would be unable to raise follow-on Series A financing, Q2 saw the # of Series A deals increase from 222 deals in Q1’13 to 246 in Q2 as well as Series A dollars jumping from $1.31B to $1.51B. The increase in Series A deals and dollars should relieve some of the pressure on seed companies raising their next round.

NY unable to keep lead over Mass. Goes back to #3

While NY beat Mass. for deal share for the 3rd straight quarter, it was unable to retain its lead for funding as Mass. took back #2 with several notable late stage deals.

Social only sees 2% of funding to Internet sector

Oh, how times have changed. Social companies saw only 2% of funding to the Internet sector in Q2’13. Business intelligence and mobile app development both saw solid gains in funding and deal share.

40 states and Washington DC all get some VC love

The “big 5,” Cali, Mass., NY, Texas and Wash, take top spots for funding. Versus Q1 which saw 44 states see companies funded, Q2’13 saw a little less geographic diversity among the VC set.

Was healthcare having the best quarter ever?

In addition to its strong IPO activity levels, the healthcare sector also saw strong VC tallies. After a dip in Q1’13, deal volume and funding to healthcare companies accelerated in the past quarter. The $1.81B invested in Q2 was a 24% increase from Q1’13. Early stage investment into healthcare also grew to a 5-quarter high.

Washington comes back to life

In Q1’13, Washington fell to #10 for funding, but in Q2, funding jumped 08% behind deals to the likes of Apptio and Cardeas Pharma. Despite the funding uptick, deal levels fell for the 3rd straight quarter.

Silicon Valley dominates So Cal

Deals and funding to Southern California companies declined on a YoY and sequential basis making Silicon Valley even more dominant for VC within the Golden State.

Clean Tech funding ends its slide. Barely

In Q2’12, the green/clean tech sector saw $1.47B invested across 49 deals. Since then, activity and funding have been anemic and declining steadily. But versus Q1’13, the past quarter did see an uptick in funding as it climbed 14% to $465M. New York came in at #4 for deal activity behind the usual suspects – Cali, Mass and Texas. Early-stage activity to clean tech was non-existent.