Tuesday, January 15, 2013

No sign of a “Series A Crunch,” as VC investing amounts drop only slightly in 2012

For 2012, VCs invested $28.3 billion in 3267 deals, CB Insights reports today.  Riding on the back of seed VC investments, deal activity saw a multi-year high.  Funding, however, fell from 2011’s level of over $30 billion.

Based on actual data, the “Series A Crunch,” like the Sasquatch, is much feared but never actually seen in these environs. Series A activity got stronger in the fourth quarter and seed investors were still active. “Any pullback by seed investors spooked by the ‘Series A Crunch’ will probably be in 2013,” says Anand Sanwal, CEO of CB Insights.

What Series A Crunch?
In fact, Series A deals saw the highest percentage of VC funding in the last five quarters. Interestingly, Series A and B both saw deal and funding increases.

Seed Investment Comes Back to Earth
After dominating deal share in Q3 2012, Seed VC funding settled back down to Q2 2012 levels, dropping to 30% in Q4. Funding levels by stage remain largely consistent with prior quarters with some ebb and flow from mid- to later-stage deals.

In contrast to the national trend, in Massachusetts, seed VC continues to grow its presence with 21% of overall deal volume for the state. Meanwhile, Series B is the big winner for funding in Q4.

Most Active VCs
New Enterprise Associates leads all VCs as most active investor in 2012, apparently putting some of its recent $2.5 billion fund to work. The top 5 funds based on activity were rounded out by Kleiner Perkins, Google Ventures, Andreessen Horowitz and First Round Capital.

38 States and Washington DC All See Some VC
California, Mass, NY, Washington and Texas remain the top 5 states for VC in Q4, but overall, 38 states got in on the VC action. But as is typical, funding and deals remain concentrated in venture’s big markets. 

Healthcare Recovers
After languishing deal activity, Q4 2012 saw healthcare deal volume recover and funding levels hit a five quarter high. Medical device firms remain the preferred area for VCs investing in healthcare. 

Mobile Sector Continues to Grow
The mobile sector saw a five-quarter high in deal activity. Mobile CRM was the biggest area for deal activity with wireless technologies the winner on the funding front. Mobile deal activity suggests it may be stealing share from internet-oriented deals. 

Internet Sector Dips
Internet falters as California dips on deals and hits a five-quarter low on funding. Mass shows resurgence in internet deal activity as does NY.

Green Tech – A Mixed Bag 
Deal activity climbs after three straight down quarters. Funding remains depressed with absence of mega-deals and negative sentiment hurting clean tech.

NY and Mass Both Gain Versus California 
Deal activity and funding hit five-quarter highs for both NY and Mass while funding to California dipped to a five-quarter low. Mass showed strength in both healthcare and internet. New York saw over 100 deals in the quarter with mobile and internet-focused companies seeing almost 80% of both deals and funding.

The insights above were drawn  from the Q4 2012 VCActivity Report provided by CB Insights. CB Insights produces data-driven reports and analyses related to venture capital, private equity and angel investment on a regular basis, including an in-depth quarterly venture capital report. Their most recent report on angel activity is summarized here.

No comments: