Dow Jones VentureSource: Bad Year For VC Deals Ended With A Decent Q4

According to statistics released today by Dow Jones VentureSource, the fourth quarter of 2009 was a strong one in light of an overall bad year for venture deal activity in the United States.

In Q4 2009, investors put $6.3 billion to work in 743 deals, up slightly from the $6.1 billion invested in 619 deals during the same period in 2008. In total, last year saw 2,489 deals completed and $21.4 billion in venture capital invested in U.S. companies, a 31% drop from 2008 when $31 billion was invested in 2,817 deals.

We also remarked earlier that we’d seen an uptick of venture funding deals in the fourth quarter of 2009, based on analysis of data available in our own CrunchBase.

Scott Austin, editor of Dow Jones VentureWire said: “While venture capitalists as a group loosened their purse strings toward the end of 2009, some start-ups, especially those seeking first or second rounds, may be in for a rude awakening in 2010. A large share of companies are due for capital this year and the competition will be fierce.”

“Venture capitalists are still treading lightly when making investments,” added Jessica Canning, global research director for Dow Jones VentureSource. “In the fourth quarter, venture deal activity returned to levels seen before the collapse of the financial markets, but capital invested continued to lag as investors gave companies just what they need to reach the next milestone.”

According to Dow Jones VentureSource, the healthcare industry collected more VC dollars than the IT industry last year ($7.7 billion compared to $6.1 billion, respectively), which would make 2009 the first year on record that this has occurred.

Within IT, software companies continued to take the largest chunk of investment as they have done since 2001. Investors put $2.9 billion into 487 software deals in 2009, a 43% drop from the previous year. The Communications and Networking segment ended the year with $1.5 billion invested in 123 deals, off 11% from the previous year.

Overall, the median round size in 2009 was $4.7 million, down from $6 million seen in 2008, according to VentureSource. Later-stage deals accounted for the largest chunk of deal activity with 944 deals, or roughly 39% of the total U.S. deal count for the year, attracting $11.4 billion in investment. Meanwhile, seed- and first-rounds accounted for 803 deals and raised $3.7 billion.

For other statistic material on the VC industry, check out the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association, analyzed here by GigaOM and Venturebeat, among others.

Dow Jones LP Source also recently released figures that showed U.S. private equity firms raised less than $100 billion in funds in 2009, down 68% compared to the year before.