Venture capitalists weren’t bashful in Q4 2011 showering 755 companies with $7.6 billion in venture funding. Q4’s performance brought 2011’s total to $30.6B invested in 3051 deals which marked a 10-year high for the VC asset class on both deals and dollars.
Let the talk of a bubble begin in 3, 2, 1…
Here are some of 2011’s highlights.
The Fat Venture Capital Funnel
With 2011’s results, the bubble talk will shift into overdrive. The reality is that VC funding is a funnel. More companies get Series A than B than C – etc, etc. Within tech, our data shows the VC funnel has gotten fat at the top (a lot of Series A and Seed deals). And VC Darwinism means that not all of these companies can or should receive Series B, C, etc. While some would rightfully say this is the way markets work, for a company raising money, this dynamic will represent a “chokepoint”. Some will receive funding, some will die quickly, some will get acq-hired or be asset sales get dressed up as acquisitions, some will be orphaned and figure out a way to make money and become steady real businesses and some will die a slower, more tortured death.
New York – Back to Reality or a Speed Bump?
One quarter does not a trend make. So after taking the #2 spot for aggregate VC deals and dollars in Q3’11, NY slipped back to #3 behind Massachusetts. The state retains its hold on #2 for tech deals and dollars and showed some life in the healthcare realm as well. We’ll see if NY can fight back like it’s resilient football Giants or whether the state will just talk incessantly and not perform like the Jets in future quarters.
Healthcare VC – Rumors of Death Greatly Exaggerated
Healthcare hit a five quarter high on funding and showed solid deal activity. Sector reverses downward trend and shows pulse to close out 2011.
Massachusetts’ Balanced Attack Brings It Back to #2
Massachusetts took back its #2 spot for both deals and dollars with deals across multiple sectors. Healthcare was particularly strong. Internet investment in the state was the one weak spot in an otherwise strong showing.
Internet Takes 1/3 of VC Dollars in 2011
Cali and NY account for 59% of internet VC deals and 66% of funding. Internet investments took over 1/3 of venture dollars in 2011. Massachusetts fell to a five quarter low on internet deal share. Mega-deals in the data storage (Dropbox and Box.net) buoy funding.
California Venture Capital Steady as Ever.
Cali still the top spot for VC deals and dollars. ‘Nuff said.
Washington Stalls. Again.
We’ll bring back our “Sleeping in Seattle” metaphor as Washington continued its multi-quarter dealflow slide and also came down on funding.