Surge Of Early Stage Deal Making Drives A Rebound In Venture Investing

Venture investing rebounded in the second quarter from a slow start to the year, returning to the levels of late 2012 on a surge of early stage investing.

Venture capitalists in the United States put $6.7 billion to work in 913 deals from March to June, according to the MoneyTree Report from PricewaterhouseCoopers, the National Venture Capital Association and peHUB publisher Thomson Reuters.

Dollars invested rose 12% from the first quarter but fell 9% from a strong second quarter of last year. Deal total in the quarter was soft, rising only 2% from the first quarter, the survey found.

Early stage activity stood out. Money going to early stage companies jumped 63% from the first quarter and was up compared with last year. Total early stage deals climbed 18% and made up 53% of all deals completed in the quarter. The percentage in the year-ago quarter was 45%.

The MoneyTree Report numbers, released Friday, parallel those of the other research outfits CB Insights, PitchBook and Preqin, which generally found a boost in investing from the first quarter and a decline from a year ago. They also suggest VCs are making the most of the Series A crunch, finding attractive opportunities among the tsunami of companies funded by angels, accelerators and other sources in the past couple years, when starting a company continued to get cheaper.

According to the MoneyTree Report, this trend hit a remarkable high point in the second quarter. Early stage dollars not only marked their highest level in six quarters, with average deal size spiking to $5.2 million from $3.7 million in the first quarter, but early stage and seed deals made up 83% of first-time financings, the largest percent since the MoneyTree began reporting in 1995.

In terms of industry segments receiving investments of all stages in the quarter, biotechnology saw a sharp rise in dollars committed, as did Internet companies. Cleantech dollars declined 6% from the first quarter and deal volume slumped 31%.

The top five financings during the period were:

  •, which raised $150 million;
  • Precision for Medicine, which raised $150 million;
  • Bloom Energy, which raised $121.8 million;
  • Intrexon, which raised $85.6 million; and
  • Acumen Brands, which raised $83.2 million.

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