Slideshow: Top 10 Sectors Backed by VCs in Q2; the Internet Isn’t the Only Game in Town
We reported last week that Internet investing helped drive second-quarter venture deal volume, but biotech, medical devices and software startups were strong money magnets as well.
So were companies in IT services and entertainment, according to data from the MoneyTree Report, which is produced by PricewaterhouseCoopers and the National Venture Capital Association, based on data from Thomson Reuters (publisher of peHUB).
For that reason, we decided to take a look at the recent quarter’s top 10 categories. If there is a takeaway it is this: Internet fever may attract the headlines, as venture investing rises to a three-year high, but VCs are interested in much more than just the latest, hot Internet site.
Take biotech, for example. Invested dollars rose 46% from the first quarter to $1.2 billion while the number of deals climbed 20% to 116, according to the MoneyTree.
Medical devices and equipment investments increased 26% to $841 million, while dollars going to information technology services businesses rose 19 percent. Not to be outdone, media and entertainment startups attracted 27% more money, and consumer products and services ventures saw a 248% increase.
Even the typically lifeless semiconductor space drew more dollars, rising 22 percent.
All of that aside, Internet-related investments carried a lot of the quarter’s water, attracting almost a third of dollars invested and setting the mark as the largest quarter for Internet investments since the dot-com bubble was deflating in the second quarter of 2001. Dollars going to Internet startups rose 72% from the first quarter, while deal volume climbed 46%, reinforcing the sense that another bubble is forming.
All this Internet enthusiasm added up to $2.3 billion distributed to 275 startups, with the sector accounting for five of the quarter’s top 10 deals.
What follows are the top ten categories from the second quarter with a year and a half of trend data.









