2009 1Q US Venture Capital Investing

This past Saturday, NVCA released the 1Q US venture capital investment numbers for 2009. According to NVCA, quarterly US venture capital investment activity was down 47% in dollars and 37% in deals since 4Q08.

What’s worth noting is that clean tech saw a huge drop with $154 million going into 33 deals, representing a 84% decline from 4Q08. That’s significantly greater than the overall decline of 47%. I’ve come across different numbers from different sources, but they all agree that investment in cleantech has hit its lowest since 2005-2007. It’s interesting to note also that other sectors didn’t take as much of a hit. This probably has to do with investors being cautious and not funding capital intensive companies that take a long time to exit.

I also did an analysis to see which regions saw the largest decline from Q408 to Q109. The result is quite interesting. In terms of decline in dollars invested, Silicon Valley and NYC (#1 and #3 in absolute $ invested) saw a lesser decline than the overall decline of 47%, whereas New England and Texas (#2 and #5 in absolute $ invested) saw a greater decline.

That said, looking at the historical numbers, we can see that the Valley has seen the greatest decline in investment dollars since 2004 (probably because it saw the biggest ramp up in $ invested and # of deals). Since Silicon Valley and NYC saw a lesser decline than some of its peers, does this mean that they’re heading toward normality faster than the other regions? Probably not. I’ve only done a Q2Q comparison, but it would be interesting to see if there’s any trend throughout the year.

It would also be interesting to see a breakdown of deal type by region (e.g. % cleantech and % IT deal by region) to see where certain deals are being sourced and how they’re affecting investment dollars in those regions.

By: Jonathan Lee
Twitter: @hi5at5

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