VC Deals In Charts (Q1 2008)—Welcome To The Slowdown

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WebMission Day 1: The flight

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Here are some slides from Pricewaterhouse Coopers and the National Venture Capital Association illustrating the trends in venture capital deals last quarter that Duncan mentioned yesterday. (Click on them for a bigger image). The overall amount venture firms invested dropped both year-over-year and quarter-over-quarter to $7.1 billion (less than any quarter in 2007, but still above the level of investment every quarter in 2006 and 2005). The average deal size is still healthy at $7.7 million. So things aren’t so bad. The concern is whether this is the beginning of a steeper decline that we will begin to see over the next few quarters, which it may very well be.

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VC money going into the software sector (broadly defined) declined 9 percent quarter-over-quarter (flat year-over-year) to $1.264 billion and was about even with the amount invested in biotech ($1.267 billion). If you cut the numbers a different way and look at Internet-specific deals, those declined 7 percent from the fourth quarter of 2007 to $1.310 billion, but were slightly up year-over-year. Meanwhile, the craze over clean-tech investments looks like it may have peaked in the third quarter of 2007 when $851 million was invested. Or, at least, it is taking a breather. That number has now gone down for two quarters, and was at $625 million during the first quarter of 2008.

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Finally, here is a breakdown of the money going into early-stage versus later-stage deals. About 23 percent of the money invested in the past four quarters went into seed or early-stage deals, which seems to actually be a slightly higher percentage than was typical over the previous two years.

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