Annual Venture Funding Drops for First Time in Three Years

by McDonnell Boehnen Hulbert & Berghoff LLP
Contact

NVCALast month, the National Venture Capital Association (NVCA), a trade association representing the U.S. venture capital industry, released the results of its MoneyTree Report on venture funding for 2012.  The report, which is prepared by NVCA and PriceWaterhouseCoopers using data from Thomson Reuters, indicates that venture capitalists invested $26.5 billion in 3,698 deals in 2012, which constituted a 10% decrease in dollars and a 6% decrease in deals as compared with 2011.

PricewaterhouseCoopers (PWC)Among the sectors hit the hardest in 2012 were the Clean Technology and Life Sciences sectors, which experienced double-digit decreases in investment dollars.  The Software sector maintained its status as the single largest investment sector in 2012, with venture funding rising 10% to $8.3 billion and deals up 8% to 1,266.  The Biotechnology sector saw venture funding drop 15% to $4.1 billion in 2012 (with 466 deals), which was still good enough for second place.  The Medical Devices sector saw drops in both dollars and deals in 2012, falling 13% in dollars (to $2.4 billion) and 15% in deals (to 313).  Overall, fifteen of the seventeen sectors tracked by the NVCA saw decreases in dollars invested in 2012, with only the Software and Retailing/Distribution sectors recording increases.Venture Funding

The annual decreases in dollars and deals for 2012 were explained in part by a 3% decrease in dollars in the fourth quarter ($6.4 billion) as compared with the third quarter (see above).  Fourth quarter deals, however, were up 5%.  While the annual numbers for the Biotechnology sector were not good, venture funding for the sector rose 3% (to $1.3 billion) and deals were up 13% (to 135) for the fourth quarter (see below).  Similarly, the Medical Devices sector saw increases in both dollars (up 32% to $581 million) and deals (up 9% to 74).

Biotech Venture FundingTracy Lefteroff, the global managing partner of the venture capital practice at PricewaterhouseCoopers indicated that "[g]eneral economic uncertainty continues to hinder capital investments, and venture capitalists are no different."  She noted that "[a]s the number of new funds being raised continues to shrink, venture capitalists are being more discriminating with where they're willing to place new bets," adding that "[a]t the same time, they're holding on to reserves to continue to support the companies already in their portfolio."  She explained that "[b]oth of these factors are taking a toll on the amount of capital available for young start-ups, which is reflected in the 38 percent drop in the number of Seed Stage companies receiving VC dollars in 2012."  NVCA president Mark Heesen pointed out that "[w]e continue to see the impact of public policy on venture capital investment levels in very specific ways," noting that "[l]ife sciences investment was suppressed for much of the year, particularly with first-time fundings, due in part to the impact of the regulatory and reimbursement environments."

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© McDonnell Boehnen Hulbert & Berghoff LLP | Attorney Advertising

Written by:

McDonnell Boehnen Hulbert & Berghoff LLP
Contact
more
less

McDonnell Boehnen Hulbert & Berghoff LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.