Venture capitalists pumped eight percent more into companies during the first quarter, but all the action came in healthcare.
Venture capitalists gave 16 percent less to companies in the IT industry, however — they invested less money into software, semiconductors and Internet infrastructure companies. Web 2.0 companies, however, appear to have drawn more money than ever. See table below. Web 2.0 companies are part of the “Information services” category, which saw $722 million, up from $659 million during the first quarter of last year.
David Hamilton covers the reasons behind the record level of healthcare investments. They include the aging baby-boomer generation, which is spending more money on healthcare, continued innovation in the area, and a track record of lucrative returns from investments in the sector.
The data comes from Dow Jones VentureOne and Ernst & Young.
Alternative energy and other clean technology companies also saw a boost. Venture capitalists invested $237.0 million into ten “alternative energy” deals, up from $53.8 million in six deals. They invested $54 million into eight “environmental” companies in the first quarter, compared to just $4 million invested in one deal a year ago, the data showed.
California dominated the venture capital activity in the first quarter, representing 44 percent of the nation’s deal flow and 48 percent of the capital invested. The San Francisco Bay Area boomed, gobbling up $2.20 billion, ten percent more than during the previous quarter.
Finally, early-stage investing increased, making up 38 percent of the deals in healthcare, noted Jessica Canning, who has just been appointed director of global research at VentureOne.