One of the most common refrains heard in the recent venture capital downturn has been that it would hurt early stage investment as venture capital funding would be siphoned away from early-stage deals in favor of investment to fortify existing portfolio companies, e.g., Series B, C, D, etc deals. While the level of early stage investment by venture capital firms might never approach the near limitless demand for such funds from aspiring entrepreneurs, the Q3 2009 data paints a clear picture – early stage investing is still happening and constitutes a significant number of the deals done in the top two sectors – healthcare and internet.
But with Q3 2009 data in, it’s worth making the discussion about early stage investment a data-driven one. The Healthcare sector has seen a steady increase over the course of the year in Series A investments. Q3 2009 saw 50 Series A Healthcare deals in comparison to the first two quarters of the year where there were a grand total of 57 Series A Healthcare investments.
The Internet sector’s early stage increase in Q3 2009 versus the first half of the year was not quite as dramatic as the Healthcare sector but remained consistent with the beginnings of the upward trajectory already witnessed in Q2 2009. Series A Internet venture capital deals in Q3 2009 totaled 66 investment versus 61 in Q2 2009 and a paltry 20 during a depressed Q1 2009.