[author: Donald Zuhn]
Earlier this 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 the third quarter of 2012. The report, which is prepared by NVCA and PriceWaterhouseCoopers LLP using data from Thomson Reuters, indicates that venture capitalists invested $6.5 billion in 890 deals in the third quarter, which constituted a 12% decrease in dollars and a 5% decrease in deals as compared with the second quarter of 2012, when $7.3 billion was invested in 935 deals (see chart below; data from MoneyTree Reports). The NVCA also revised its second quarter numbers, raising the funding and deals totals by $300 million and 37, respectively (see "Venture Funding in Life Sciences Sector Drops 9% in Second Quarter").
While the report indicates that the venture funding in the Life Sciences sector (biotechnology and medical device industries) was down 19% in dollars and 12% in deals for the first three quarters of 2012 as compared to the first three quarters of 2011, investment in biotechnology increased by 64% in dollars to $1.2 billion and 22% in deals to 116 in the third quarter. Second quarter investment in biotechnology had dropped below $1 billion and 100 deals (see chart below; data from MoneyTree Reports). The report also noted that medical device funding declined for the third consecutive quarter, falling 37% in dollars and 27% in deal volume with $434 million going into 65 companies, which constituted the lowest dollar level of investment in the industry since 2004. Overall, seven of the seventeen sectors tracked by the NVCA saw increases in dollars invested in the third quarter (in the second quarter, eleven of seventeen sectors saw increases).
NVCA president Mark Heesen noted that "[t]he third quarter numbers tell a story consistent with investment themes we have been seeing throughout 2012," pointing out that "life sciences investment remains low, reflecting ongoing concerns regarding regulatory uncertainty, capital intensity and investment time horizons in the space." Tracy Lefteroff, the global managing partner of the venture capital practice at PricewaterhouseCoopers, observed that "fewer new venture funds [were] being raised which means less capital is available for new investments." Stating that "venture capitalists [have been] very cautious with the capital that is available," she noted that they were instead "continuing to support the companies already in their portfolio."
For additional information regarding this and other related topics, please see:
• "Venture Funding in Life Sciences Sector Drops 9% in Second Quarter," July 22, 2012
• "Biotech Venture Funding Drops 43% in First Quarter," May 3, 2012
• "Venture Funding Increased 22% in 2011," February 2, 2012
• "Life Sciences Venture Funding Drops in Third Quarter," October 27, 2011
• "Life Sciences Venture Funding up 37% in Second Quarter," August 1, 2011
• "VentureSource Reports 35% Increase in 1Q Venture Funding," April 26, 2011
• "NVCA Reports Modest Gains in First Quarter Venture Funding," April 19, 2011
• "NVCA Reports 31% Drop in Venture Funding for Third Quarter," October 17, 2010
• "NVCA Reports 34% Increase in Venture Funding for Second Quarter," July 22, 2010
• "NVCA Report Shows First Quarter Drop in Venture Funding," April 20, 2010
• "Biotech/Pharma Financing Improving, R&D Spending Up," August 31, 2009
• "NVCA Study Shows Increase in Third Quarter Venture Funding," October 23, 2009
• "First Quarter Venture Capital Funding at 12-Year Low," April 23, 2009
• "NVCA Study Shows Decline in 2008 Investment; BIO Study Predicts Biotech Rebound in 2009," February 16, 2009