CB Insights, a venture capital database, recently released an activity report for venture capital in 2012. The numbers have been disappointing and disheartening for many – except mobile technology and health care companies. The total VC investment for the year is much lower than that in 2011 – $28.3 against $30.6. While the first quarter of last year was particularly disappointing with only $5.9 spent in VC, the second quarter offered some solace with $8.1. However, the third and fourth quarter show a consistent downward trend, ending with a low $6.8 as compared to $7.6 in Q4’11.
A decrease in funding of Internet companies has played a large role in these reduced numbers. In the fourth quarter, capital flow towards Internet companies went down by 7.5% and the number of deals slipped by 7.1%. Some dot com companies that received considerable funds include Cloudera, Zulily, One Kings Lane, 1stdibs and 23andMe. Among the top 5 funded companies overall, there was only one Internet platform – Everything.me.
The mobile industry and health care helped offset the dip caused by a lack of interest in the Internet. The number of deals in mobiles increased and eyes continue to remain on the industry with expectations of more VC. 2012 was the best year for healthcare in terms of venture capital in-flow. The industry saw 164 deals in Q4 and investment amounting to $1.98 billion. Intarcia, GeriNet Therapeutics, Pearl Therapeutics, Ultragenyx Pharmaceutical and Vital Therapies are some of the main winners of funding in healthcare.
An intriguing feature of the 2012 records is that the decrease in investment dollars is matched by a contradictory increase in the number of deals. There were 755 deals in Q4 of 2011, which went up to 834 in Q4 last year. It could be that startups are now seeking smaller amounts from a number of VC’s so as to improve their chances of getting approval. Further, the growing trend of crowd funding from websites like Kickstarter could have affected the venture capital numbers. Enterprise Associates was the largest provider of angel investment in 2012, followed closely by Kleiner Perkins, First Round Capital Google Ventures, and Andreessen Horowitz. In terms of geographical mapping, California and New York saw most of the incoming of venture monies. This is quite in line with previous years. Overall, 38 states received funding last year.
