NEW YORK - January 18, 2013 (www.investorideas.com newswire) Investment into U.S.venture-backed companies continued its year-over-year decline in the fourth quarter of 2012, as U.S.-based companies raised $6.6 billion from 733 venture capital deals, according to Dow Jones VentureSource. The drop represents a 20% decrease in capital and a 17% decrease in deals from the same period in 2011.
During 2012, venture capital investment totaled $29.7 billion for 3,363 deals, a 15% decline in capital and a 4% decline in deals from the previous year.
"This quarter's drop in venture capital investment marks the third time on record that a fourth quarter has been the lowest of the year," said Maryam Haque, senior research analyst for Dow Jones. "Investors became increasingly cautious as exit activity and venture capital fund-raising declined in the latter half of 2012, which seems to have hindered many startups' efforts to raise money before the year ended."
While the median amount invested in a financing round fell 15% from $5 million in 2011 to $4.3 million in 2012, the median investment for the fourth quarter increased 11% in 2012 to $4.7 million.
Corporate deals dominate for first time in over a decade
In 2012, corporate investment saw its best year since 2000.
Eight corporate deals garnered $220 million in the fourth quarter, a 32% increase in capital despite 50% fewer deals compared to 2011.
Foxconn's $200 million corporate investment into Woodman Labs, Inc. represented the second highest equity investment of the fourth quarter.
GreatPoint Energy, Inc. was the largest equity investment of the year, raising $420 million in capital from China Wanxiang Holdings.
IT remains investor favorite
Information technology (IT) continued to attract investors throughout 2012, accounting for 33% of the total venture capital investment.
1,194 deals raised $9.9 billion, a 15% and 7% increase in capital and deals, respectively, from the $8.6 billion garnered by 1,111 deals in 2011.
Software investments dominated the industry, with 942 deals garnering $6.5 billion, a 14% increase in deals and a 29% surge in capital from the previous year.
Healthcare, Consumer Services and Business/Financial Services continue to struggle as year ends
Although investment in healthcare companies increased quarter over quarter in 2012, the industry raised 19% less capital compared to 2011.
682 deals raised $7.1 billion in 2012, a 12% decrease in deals compared to the 777 deals that netted $8.8 billion the year prior.
Biopharmaceuticals deals dropped 14% and 17% in deals and capital, respectively, as 266 deals raised $3.5 billion.
Medical devices and equipment fell 10% in deals and 21% in capital as 285 deals raised $2.7 billion.
Consumer service investments also declined in 2012, dropping below 2010 levels.
670 deals raised $4.4 billion, a 29% decrease in capital from the 674 deals that garnered $6.3 billion in 2011.
Consumer information services accounted for much of this drop, as 465 deals raised just $2.8 billion, a 39% decrease in capital from the $4.6 billion raised across 500 deals last year.
Despite showing positive signs for exit markets and raising over $1 billion in each of the first three quarters, companies in the business and financial services sector saw a significant drop in the fourth quarter, raising $688 million through 101 deals.
507 deals netted $5 billion in 2012, representing a 17% and 18% decrease in deals and capital, respectively, from 2011.
Investment in the largest segment, business support services, fell 17% from $4.5 billion in 2011 to $3.8 billion in 2012.
Energy/Utilities plummet
Investment in energy and utilities saw its worst year since 2006 in terms of both deals and capital raised.
92 deals raised just $1.7 billion, a 35% decrease in deals and a 47% decrease in capital from the 142 deals that netted $3.3 billion in 2011.
Although renewable energy accounted for the majority of energy deals, the segment also had its worst year in six years, with just 69 deals raising $1.2 billion.
Renewable energy decreased 61% and 40% in capital and deals, respectively, from the $3 billion raised across 115 deals the previous year.
Industrial Goods/Materials show slight uptick
Other than IT, investments in industrial goods and materials were the only bright spot for venture capital financing in 2012. The industry raised $943 million across 104 deals, a 5% decrease in deals and a 3% increase in capital from the 110 deals that raised $918 million during 2011.
For information on Dow Jones VentureSource's research methodology, visit http://bit.ly/VSFAQs. For general information about Dow Jones VentureSource, visit here.
This news is published on the Investorideas.com Newswire and its syndicated partner network
News now!
Get Free investor news and stock alerts:
Sign up here
Disclaimer: The following news is paid for and /or published as information only for our readers.Investorideas.com is a third party publisher of news and research. Our sites do not make recommendations, but offer information portals to research news, articles, stock lists and recent research. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All Investment involves risk and possible loss of all investment. Disclaimer in full, Investorideas.com Disclosure Please read individual disclosures for featured stocks.
BC Residents and Investor Disclaimer: Effective September 15 2008 - all BC investors should review all OTC and Pink sheet listed companies for adherence in new disclosure filings and filing appropriate documents with Sedar. Read for more info
