Venture capitalists are putting more cash to work in early-stage companies, boosting the dollars and deals in the category. That’s one of the latest findings in the second quarter MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association.
The number of first-time financing deals rose 10 percent to 302 companies, while dollars into those companies jumped 24 percent to $1.1 billion. First-time financings accounted for a third of all deals during the quarter, and 17 percent of dollars. That was up from 31 percent and 15 percent in the first quarter.
Meanwhile, the average deal size role to $3.7 million, up from $3.2 million.
“The increase in early stage investing is an encouraging sign that entrepreneurs with innovative ideas can get the funding they need to succeed,” said Mark McCaffrey, global technology partner and software leader at PwC US. “As the exit window continues to open, we’ll continue to see VCs shifting their focus back to companies in the earlier stages of development.
Companies in the software arena accounted for the biggest share of first-time financings.
And, overall, software remains the leading investment category in the U.S. Despite a seven percent drop in dollars during the quarter, software companies still pulled in $2.1 billion, the fifth consecutive quarter of more than $2 billion. Life sciences ($1.3 billion) and the Internet ($1.9 billion) categories saw dramatic increases during the quarter.
In total, U.S. venture capital investments rose 12 percent to $6.7 billion as 913 deals were completed.
California still remains on top in terms of its share of venture capital, pulling in more than $3 billion. Washington state saw an increase over the previous quarter as 27 companies received $207 million. In Oregon, eight companies received $15 million.
Here’s a graphic from a previous report from CB Insights, which showed similar data for Washington state.
