Last year brought a broad-based rebound in venture investing. Dollars committed rose 22% and most industry sectors benefited. Software, biotech, cleantech, Internet, medical devices and IT services all saw an increase in dollars to startups.
But a noticeable shift in the funding landscape set 2011 apart from the past decade. Early stage investing leapt to a decade high both in dollars allocated and deals done. And seed investing by VCs tumbled almost in half, by 48%, to a seven year low.
In the following slideshow, we look at investment trends of the year just passed. By many measures it was a strong year. Investments of $28.4 billion were the third highest in a decade, according to the MoneyTree Report from PricewaterhouseCoopers, the National Venture Capital Association and Thomson Reuters, publisher of this blog. Deal volume rose a more constrained 4%, so average deal size increased.
Part of the rebound was the result of an upswing in later stage investing. A third of all dollars went into later stage deals as VCs shored up their portfolios and bet on companies seemingly best positioned to enter the IPO pipeline, the MoneyTree Report shows. This was an increase from 2010.
The year saw a resurgence of cleantech. Despite all the talk of firms losing their nerve in the face of slow to ripen exit markets, a record $4.29 billion went to work, passing the previous high of $4.08 billion in 2008. “There certainly has been a decline in the number of venture capital firms participating in the sector,” notes Jon Sakoda, a partner at New Enterprise Associates. But those who remain are committed.
Perhaps the most interesting development in 2011 was the surge of early-stage investing. The MoneyTree Report shows $8.3 billion went into 1414 deals, a total that is up 47% in dollars. Average deal size grew.
The opposite took place among seed category deals. Deal volume remained stable while dollars fell, so the average deal size dropped nearly 50% to $2.3 million.
What follows is the slideshow.
[slide title="Venture Investing Rebounded In 2011 To The Third Highest Level In A Decade"]
[slide title="Deal Volume Rose But At A Slower Pace"]
[slide title="The Year Saw Seed Investing By Venture Firms Fall Sharply"]
[slide title="While The Number Of 2011 Seed Deals Held Steady"]
[slide title="So The Average Size Of Seed Deals Plunged In 2011"]
[slide title="In Contrast, Early Stage Investing Soared To A Decade High"]
[slide title="And Early Stage Deal Volume Jumped As Well"]
[slide title="As Did The Average Size Of Early Stage Deals"]
[slide title="The Top Two 2011 Investment Categories Were Internet And Software"]
[slide title="And The Top 2011 Deals Included Reata, Dropbox And BrightSource"]