Venture capital takes first fall in three years; biotech tanks

Venture capital funding tanks for the first time in three years.
Venture capital funding tanked for the first time in three years.
(Susana Gonzalez / Bloomberg)

Venture capital funding shriveled for the first time in three years in 2012, with investors funneling $26.5 billion to companies over 3,698 deals, according to a new report.

That’s a 10% drop in dollars and a 6% slide in deal volume, according to the National Venture Capital Assn. and PricewaterhouseCoopers in their MoneyTree report.

Why the hesitation? “General economic uncertainty,” said HJ Paik, director of the Southern California Emerging Company Services practice at PwC, in a statement. That includes last year’s fiscal cliff fears, ambivalence over the presidential election and unstable markets.

Software companies dominated the venture capital scene, raising $8.3 billion over 1,266 deals – an 8% surge in volume from 2011 and the largest monetary haul in the last decade.


Biotech was the second largest investment sector, picking up $4.1 billion through 466 deals. The $155.9-million investment deal for Hayward biotech firm Intarcia Therapeutics Inc. was the largest on the books for the year.

Still, the biotech sector saw the value of venture capital deals slide 15% in 2012. Clean-tech also stumbled, with a 28% dollar drop and 23% deal volume plummet to $3.3 billion and 267 deals.

Of the 17 industries evaluated in the report, which is based on Thomson Reuters data, 15 experienced venture capital declines.

Internet companies suffered a 5% slump in dollars and deals to $6.7 billion over 976 rounds, but the sector still had its second-best performance since 2001.


Nationwide in the fourth quarter, the value of deals dipped 13.3% to $6.3 billion across 968 transactions compared to 2011.

California sucked up a massive chunk of the action, with 404 deals generating $3.2 billion in investments. Massachusetts followed with $743.9 million from 108 deals.  


Consumer confidence drops to lowest level since 2011

L.A. is a bright spot among underfunded city pensions

With inflation benign, workers saw solid real wage gains at year-end

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