Venture Investing Falls 11.6% in the Third Quarter

Venture capitalists remained cautious during the summer months of a presidential election year, reining in third quarter investments in the face of a slow economy and soft IPO market.

Investments by U.S. firms came to $6.49 billion in the quarter, down 11.6% from a year ago, according to a new MoneyTree Report. GPs funded 890 deals, a decline of 10% from the third quarter of last year and 5% fall from this year’s second quarter.

The MoneyTree Report is prepared by PricewaterhouseCoopers, the National Venture Capital Association and Thomson Reuters, publisher of this blog.

The third quarter total brings year-to-date investing to $20 billion, or well below the level of last year, suggesting that 2012 is unlikely to pass the $29 billion mark of 2011.

Both early- and late-stage investing fell equally hard, down 20% in dollars from a year ago. Early-stage deal volume added up to 395, compared with 424 in the second quarter of this year. One hundred eighty seven late-stage companies received funds, compared with 195 a quarter ago.

Software was the largest category of investment. GPs put $2.1 billion into 304 deals, a decline of 12% from the second quarter in dollars. Deal volume was largely unchanged. Biotechnology followed with $1.2 billion invested in 116 companies.

Internet company investing was down 12% but came in at $1.7 billion with 250 deals completed during the quarter. Cleantech investing of $791 billion was down 20%.

The top deal of the quarter was the $200 million funding of Square. Box raised $125 million, Elevance Renewable Sciences $104.4 million, Fisker Automotive raised $103.7 million and raised $100.8 million.

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