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Third Quarter VC Activity

By October 21, 2010Commentary

PriceWaterhouseCoopers and the National Venture Capital Association released their regular quarterly report on venture capital activity.  The third quarter of 2010 showed a decline in activity from the first two quarters and from 3rd Q 2009.  The first two quarters of 2010 had shown upticks over the corresponding 2009 quarters.  Altogether health care received over 35% of funding, mostly for biotechnology, followed by medical devices and then health care services.  Funding in health care services appears to have stepped up significantly in 2010.   (NVCA Report)

The average deal size for health care services picked up dramatically for health care services but stayed fairly steady for biotechnology and medical devices.  Money continues to be devoted more to later rounds than early-stage financing.  The coasts continue to dominate the money-raising, along with Texas.   Although far below peak levels, exit activity has remained steady for the last two years.  This is important because those liquidity events provide investors with capital that they can put into new companies.  They also facilitate funds raising new money.  IPOs continue to be a fairly rare form of liquidity event.  There were only four health care IPOs in the quarter but 14 acquisitions.

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