Venture Capital Delcines In Third Quarter, Private Placements Up

For all the hair-pulling that too much venture money is being thrown at startups, the third quarter actually saw a 31 percent sequential drop in venture dollars invested in the U.S., according to a new MoneyTree report from PriceWaterhouseCoopers and the National Venture Capital Association (see charts here). In the third quarter, VCs invested $4.8 billion in 780 deals, down from $6.9 billion in 962 deals during the second quarter (note that they reported slightly different numbers at the time, but I am using updated numbers here). Even compared to the third quarter of 2009, VC dollars are down 8 percent.

The biggest reason for the decline is that the second quarter was a huge quarter for later-stage cleantech deals, which are more capital intensive. The dollars going into cleantech went from $1.5 billion in the second quarter to $625 million in the third quarter, or a drop of nearly $1 billion. There were also fewer cleantech deals, with 58 in the quarter compared to 78 in the second quarter. And compared to last year, VCs poured $916 million into 53 cleantech deals in the third quarter of 2009.

While the bumpiness of cleantech investments explains most of the decline from last quarter, it does not tell the whole story. Of the 17 different industry sectors the reoprt tracks, 14 were down. For instance, $652 million less went into biotech and medical device startups compared to the second quarter. Infotech was also down. Software startups raised $1 billion in funding during the third quarter, down from $1.2 billion in the second quarter, but up from $800 million last year. Of that $1 billion, $660 million was invested in Internet companies, down 25 percent from the second quarter and down 14 percent from a year ago.

But what about early-stage seed deals, where frothy valuations seem to be increasingly appearing? A full third of all financing rounds (255 deals) and a quarter of the capital ($1.2 billion) went to first-time financings. This mars the fourth consecutive quarter when first-time financings were more than $1 billion, and compared to a year ago, they’ve been growing as a percentage of all venture deals and dollars.
Venture Dollars Drop 31 Percent In Third Quarter, Led By Decline In CleanTech Fundings

About PPM

PPM is the leading U.S. entrepreneurial firm that specializes in writing private placement memorandums (PPM) and linking investors with entrepreneurs.

Since 1999, the founders of PPM have provided professional business writing services, such as a PPM or business plan, to more than 2,000 businesses worldwide. Our company is considered to be the most cost effective, efficient consultants for private placement memorandum development in the United States. We are Wall Street’s, and by extension, the New York private placement (PPM) leaders.

PPM’s main service is the creation of private placement memorandum regulation d (Reg. d) documents. However, we offer much more. In case the entrepreneur needs additional services, such as a business plan, website, or additional legal work, PPM can create one pricing package for all required documentation or service. Because we simultaneously work with many companies both in and out of the U.S., the ability to adapt to the individual needs – as well as to regional and global demands – helps our clients save needed capital and time.

We are leaders in:

• New York Private Placement
Real Estate Private Placement
• Venture Capital Private Placement
• Debt Private Placement
• Equity Private Placement
• Venture Capital Private Placement Memorandum Writing
• New York Private Placement Memorandum Writing
Real Estate Private Placement Memorandum Writing
• Debt Private Placement Memorandum Writing