A report released over the weekend by PricewaterhouseCoopers and the National Venture Capital Association showed an expected decline in VC activity from the previous quarter.
Venture capitalists invested $7.1 billion in 907 deals in the third quarter of 2008, according to the MoneyTree Report from PricewaterhouseCoopers (PwC) and the National Venture Capital Association (NVCA) based on data provided by Thomson Reuters. Quarterly investment activity was down 7 percent compared to the second quarter of 2008 when $7.7 billion was invested in 1033 deals. Despite the turmoil in the global financial markets in the United States, venture capital investing remained within historical norms in the third quarter of 2008.
"The financial crisis in October was not reflected in the third quarter venture capital investment levels," said Mark Heesen, president of the National Venture Capital Association. "We will be watching the mix of first time vs. follow-on rounds closely in the coming months for any notable decline. If venture backed companies can't exit due to continued poor market conditions, venture firms will have to commit additional time and unplanned follow-on rounds of financing to those existing portfolio companies, which will channel resources away from new deals. During the next year, venture capital investment levels will be driven significantly by the clean tech sector, which will continue to grow despite economic woes and could become the top investment sector for the venture capital industry by 2012."
Full press release and report from NVCA (PDF).