Increased Investments in Seed and Early-Stage Companies and in Biotechnology Fuel VC Gains in 2Q

According to The MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters, second quarter investments in seed and early-stage companies grew 67 percent over first quarter 2009 and helped the venture capital industry achieve 15 percent growth overall for the quarter. 

Growth in seed and early deals was most dramatically demonstrated in the size of investments in these companies as opposed to deal volume.  The average deal nearly tripled in second quarter with $1.5 billion invested in 221 deals (average deal $9.5 million) as compared to $885 million being invested in 233 deals (average deal $3.7 million) in the first quarter.

Life sciences, including biotechnology and medical device development, represented the highest percentage of total VC investments since the launch of the MoneyTree Report.  The sector jumped 47 percent.  Four of the top ten deals in the quarter were in life sciences.  This includes the largest deal of the quarter which was in a biotech seed stage company. 

“The increase in the seed deal size can be explained by the jump in biotech deals, which require more capital to reach their markets than, for example, a Web startup,” comments Will Indest, TechColumbus vice president, venture development.   

First time financing also saw a jump, accounting for 18 percent of all VC investments in second quarter with seed/early stage companies receiving 73 percent of all first-time dollars and 72 percent of the deals. 
For more details, see the release.