The MoneyTree™ Report is produced quarterly by PricewaterhouseCoopers and the National Venture Capital Association based upon data from Thomson Reuters.  The Report measures both number and amount of equity investments in venture-backed companies in the US where at least one round of financing involving a professional VC firm or equivalent has been made.   The Report does not include debt, IPO’s, recaps, etc.

For 1Q10, national VC Capital Investments amounted to $4.7 billion which was up 38% YOY from 1Q09 but fairly flat versus the last half of calendar 2009.   Historically, levels of investment are running in line with those found back in 2003.   Although the VC market has stabilized somewhat, concerns over the lack of exits and liquidity along with reluctance of limited partners to invest in this space continue to exist.

On a national level some key takeaways include the following:

Ø  $4.7 billion was invested in 681 deals.

Ø  32% or $1.5 billion was in 202 deals in Silicon Valley which was once again the leading region.

Ø  15% or $685 million was in 78 deals in Southern California fairly evenly spread among LA, OC, and SD counties.

Ø  Leading sectors in terms of dollars were biotechnology, software, industrial/energy, medical devices, and semiconductors.

Ø  Leading sectors in terms of deals were software, biotechnology, industrial/energy, media and entertainment, and medical devices.

Ø  Funding was predominantly in expansion or later stage versus start up or seed.

On a regional level for Southern California some key takeaways include the following:

Ø  Leading sectors in terms of dollars were industrial/energy (primarily due to two larger deals), medical devices, biotechnology, media and entertainment, and semiconductors.

Ø  Leading sectors in terms of deals were software, biotechnology, media and entertainment, medical devices, and industrial/energy.

Ø  Most investments continue to be made by local VC firms, however there has been an increase in foreign firm investments including those who are overseas.

Lastly, an emerging trend has been for VC investments to be lower in amount and greater in number to increase the chance of achieving a greater ROI.   This also ties in with lower commitments from limited partners.   If liquidity remains and issue, there will likely be a continued shake out of the local VC firms who are not capitalized properly.  VC firms are also less willing to make a larger single investment but are preferring to invest in multiple tranches on a need basis as the entity shows a growth pattern.

VC capital is but one means of obtaining cash or providing an exit and may or may not be the right solution for an individual business owner.   At B2B CFO^® our partners have the experience and resources to help business owners obtain clarity in their options.

Full results may be found at www.pwcmoneytree.com.

At B2B CFO^® we concern ourselves with the client’s success and aspire for them to attain their goals and dreams.

Cash.  We help you get it.