Venture capitalists are pumping more money into early-stage companies. And that, say some industry watchers, is very much a good thing. According to the MoneyTree report from PricewaterhouseCoopers and the National Venture Capital Association, venture capitalists invested $2.1 billion in 410 early-stage deals, the biggest total since the first quarter of 2001.
The early-stage investment milestone was not lost on Mark Heesen, president of the National Venture Capital Association.
“We continue to watch the early stage and first time financing numbers as they are critical to the U.S. innovation pipeline,” said Heesen. “We are encouraged that these numbers were stronger this quarter and hope that this signals an ongoing commitment on behalf of venture firms to make these longer term, breakthrough investments.”
In total, venture capitalists invested $7 billion in 898 deals during the quarter, a 17 percent increase in dollars and an 11 percent increase in deals when compared to the first quarter. The numbers, however, were down on a year-to-year comparison. Last year during the second quarter, $8 billion was invested in 1,057 deals. Here’s a look at the activity in recent quarters, according to the MoneyTree report.
In Washington state, the MoneyTree report tracked $235 million invested in 25 deals. That was down from $267 million in 26 deals for the previous quarter, but up over last year (in terms of dollars) when $139 million was invested. A number of the companies that raised cash during the most recent quarter, including BeamIt, EveryMove and Buddy Platform, fall squarely in the early-stage category.
A report earlier this week from CB Insights found that 32 companies in Washington state raised $312 million, more than doubling the total of the second quarter last year. Another survey from DowJones VentureSource, set to be released Friday, tracked $327 million invested in the state during the second quarter.
Both the DowJones and the CB Insights report included a more than $100 million venture round in Donuts Inc., while MoneyTree did not tabulate the funding for the Seattle area domain name registrar during the quarter.
Led by eNom founder Paul Stahura, Donuts’ funding from the likes of Austin Ventures, Adams Street Partners, Emergence Capital, TL Ventures and Generation Partners is among the largest venture capital deals in Washington state in recent years. The surveys use different methodologies to come up with their numbers.
At the current pace, venture capital investing in the U.S. is expected to exceed the $23 billion invested in 2010, but fall short of last year’s total of $30 billion. Software remains the number one sector of investment, attracting $2.3 billion during the second quarter.
Here’s a look at the deals from Washington state, as tracked by the MoneyTree Survey.