Useful Stats: U.S. Venture Capital Investment 1995-2010 and Investment by State 2010

U.S. venture capitalists invested $21.8 billion in 2010, a 19.4 percent increase over 2009 and the first increase in venture investment since 2007, according to the National Venture Capital Association (NVCA) and PricewaterhouseCoopers Moneytree Survey. The growth in activity affected nearly every industry, particularly clean energy software and Internet-specific companies. Early stage investments, though not seed stage investments, grew by double-digits as did first-time financings. In addition to the gains in venture dollars, VC deals grew to 3,277, a 12 percent increase over 2009. Venture capital (VC) returns also have begun to improve for the 3, 5 and 10 year horizons, according to the Cambridge Associates and NVCA.

Software once again became the single largest investment sector, surpassing life science. In the third and fourth quarter, the software sector returned to 2007 levels of activity, while life science saw slight declines, particularly in the medical device industry. Clean energy sector dollars grew by 76 percent, a significant increase but still below 2008 levels. Much of this growth was due to large deals, including five of the year's top ten deals. Early stage investment dollars grew by 15 percent and expansion stage investment grew by 47 percent, while seed stage and later stage investments remained comparatively steady. As these middle stage deals became more prevalent, average deal size also increased to $6.6 million. Despite the uptick, average deal size remains at 1990s levels.

SSTI has prepared a table showing U.S. VC dollar investment, per capita dollars, deals and average deal size from 1995-2010. View the table at: http://ssti.org/Digest/Tables/020211t.htm.

Read the NVCA/PWC Moneytree Survey press release: http://www.nvca.org/index.php?option=com_docman&task=doc_download&gid=689&Itemid=93.

The NVCA/Cambridge Associates report found that venture capital performance began to improve in the second half of 2010, reversing the downward trend of the previous year. While the shift was not dramatic, the improved performance over the three, five and 10-year horizons are the first signs of recovery since the financial crisis. Researchers expect the postive trend to continue into 2011.

Read the NVCA/Cambridge Associates release at: http://www.nvca.org/index.php?option=com_docman&task=doc_download&gid=697&Itemid=93.

State-by-State
California continues to dominate the VC landscape with more than half (50.3 percent) of all venture dollars and 39.3 percent of deals. Massachusetts, however, has the highest per capita figures, with $359.84 invested per resident and 53.2 deals per every million residents. Together, these two states received 61.2 percent of U.S. venture capital investment in 2010, far outpacing the rest of the country. Within California, Silicon Valley continues to be the primary location for deals and dollars, receiving 39 percent of all U.S. venture dollars in 2010. The Los Angeles/Orange County region also has been an increasingly important center of venture activity. In 2010, the Los Angeles region grew its venture dollars by 65.8 percent over 2009 and received 7.3 percent of U.S. venture dollars, greater than the entire Southeast or the Midwest.

Top states for venture dollars and deals relative to population include Massachusetts, California, the District of Columbia, Colorado and Washington. These five states are the only state economies that have higher venture dollars per capita than the overall national level of $71.08. Without California's extremely high level of venture activity, U.S. venture dollars per capita falls to $40.16, roughly in the middle of the state rankings.

SSTI has prepared a second table of 2010 venture capital totals by state, share of the national total, deals per million residents and dollar amount per capita. View the table at: http://ssti.org/Digest/Tables/020211at.htm.