Venture activity dropped dramatically in Q109 — and internet and media/entertainment startups were not spared from the carnage, according to a report by The National Venture Capital Association (NVCA) and PriceWaterhouseCoopers Activity among online-related businesses dropped 31 percent from Q408 to $556 million spread across 123 deals. Media and entertainment deals (no number given) decreased 45 percent from Q408.
— Concentration turns to exits: Those weren’t the only sectors to feel the sting of less venture dollars. Total venture deals across all industries fell 47 percent to $3 billion and 37 percent in terms of the number of deals to 549. Mark Heesen, president of the NVCA , attributed the decline to venture funds focusing more on companies currently in their portfolios as exit opportunities — whether from a sale or an IPO — become scarce in a weak economy. Financial services was the only industry to increase the amount of venture funding received during the quarter — a 26 percent rise in dollars to $108 million and 21 percent gain in the number of deals to 17.
Photo credit: DavidDMuir
— Seed money doing comparatively better: Though down big, seed and early-stage backing held up relatively well compared to expansion-stage investments — receiving 45 percent less dollars during the quarter versus a 60 percent decline for expansion-stage investments. We recently reported that larger digital media VC funds like Spark Capital and Sequoia Capital had started to devote more dollars to seed and early investments so it should be interesting to see how these bets impact the number of smaller deals in the digital media industry during 2009.