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Summary:

How did venture capital stack up in 2012 compared to 2011? A new report taking a look at all VC investments for the past year breaks down some of the trends, noting overall decreases in funding but a few areas that did well.

Money changing hands
photo: Corbis / Jonathan Gelber

A recent report on venture capital investments for 2012 found that as a whole, the industry saw a 10 percent dip in total dollars funded and a 6 percent dip in number of deals over the previous year, seeing an overall downturn compared to the previous year. On the whole, venture capitalists invested $26.5 billion in 3,698 deals in 2012.

VC investments decreased substantially in the areas of clean technology and life sciences, which was balanced by significant increases in the software industry. The investments trended away from seed investments and toward early-stage (as in, the period in a startup’s lifespan beyond seed stage.)

The information is provided from the MoneyTree Report by PricewaterhouseCoopers LLP and the National Venture Capital Association (NVCA), based on data from Thomson Reuters. Here are some notable facts from the report, released Friday:

  • In Q4, VCs invested $6.4 billion into 968 companies, a 3 percent decrease in dollars but 5 percent increase in number of deals over Q3.
  • 38 percent fewer seed stage companies received VC dollars in 2012 than 2011.
  • Software made up the largest investment sector of the year, seeing a 10 percent increase in dollars and 8 percent increase in deals over 2011.
  • First-time financings in biotechnology and medical devices saw some of the biggest decreases in funding, with the lowest number of deals since 1995.
  • Clean tech saw serious drops as well, with a 28 percent decrease in dollars and a 23 percent decrease in deals. The sector saw only $3.3 billion in funding, as compared to $4.6 billion in 2011.
  • Internet companies saw a 5 percent decrease in dollars and deals this year, but still had the second-best year for internet deals since 2001. They made up about a quarter of all VC deals this year.
  1. Not only 10% less funding, but a lot of the recent rounds are going to companies at the “mezzanine” level and not to early startups. VC is looking more like PE these days, and that isn’t a good thing for innovation and business creation.

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  2. Well said Matt

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