VC report: Rounds get fatter as the number of deals shrinks

In another sign that venture capital groups are getting more aggressive, Dow Jones VentureSource reported today that VCs invested $6.4 billion in 661 deals in the first quarter, a whopping 35 percent increase in the amount of money being pumped into American enterprises. But when you break down the numbers on healthcare, you can see that the size of new rounds for the life sciences industry is growing, even as the overall number of deals shrinks.

Venture funds are the life blood of biotech companies and since the crash of 2008 VCs had pulled back, starving the industry of vitally needed investment cash as IPOs largely vanished as a ready exit strategy for leery investors. This new report, which follows a string of upbeat assessments about the revival of venture financing in the U.S., offers hope that those developers which can win support are likely to see significantly fatter rounds. But fewer companies are making the grade.

Overall there were 148 deals for healthcare companies, with investments leaping 21 percent to $1.6 billion. "As usual," VentureSource reported, "Biopharmaceuticals took the lion's share of investment, raising $849 million for 61 deals, a 13% drop in deals and 15% increase in capital invested. Medical Devices, the industry's second-largest sector, raised $635 million for 60 deals, a 14% drop in deals and 31% increase in capital raised."

Those numbers closely follow MoneyTree's first quarter report, which found that VC groups invested $1.4 billion in life sciences companies, with 164 deals. Total dollars invested jumped 16% but deal volume dropped 9%.

"Large deals for capital-intense industries--such as renewable energy, healthcare and information technology--drove the investment increase in the first quarter," said Jessica Canning, global research director for Dow Jones VentureSource. "Venture capitalists, however, were not the only investors giving venture-backed companies sizable cash infusions. With acquisition prices on the rise, corporations are more inclined to invest and they funded three of the 10 largest deals confirmed during the quarter." Corporations provided $448 million of the $6.4 billion raised by venture-backed companies.

- check out the press release
- here's the story from VentureBeat