VC Deals Scarce, But Signs Of Life - InformationWeek

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VC Deals Scarce, But Signs Of Life

Venture capital interest in clean technologies and a more active start than last year may signal a turnaround in tech investing.

Venture capital investing remained in the doldrums in the first quarter, although there were a few signs that a weak turnaround may be developing. A few bright spots were visible, particularly in clean technologies, according to two VC reports.

VentureSource and The Money Tree reported slightly higher sums of money invested by VCs in the first quarter, but the totals invested still remained far below the salad days earlier in the decade.

Mark Heesen, president of the National Venture Capital Association (NVCA), said he expects venture capital firms to focus on fundraising this year. "Despite a great deal of economic uncertainty in the first quarter," he said in a statement, "the venture capital industry moved forward with a more active start than it did in 2009, which bodes well for the remainder of the year. (Investments) in clean energy and life sciences will likely drive the overall levels, but likely not far past the $20 billion mark for the year."

The Money Tree report, by PricewaterhouseCoopers and the NVCA, is based on data from Thomson Reuters. The software industry completed 144 rounds of investments during the quarter -- a figure that put software investments at their fewest number of deals since the fourth quarter of 1995.

Investments in firms dependent on the Internet totaled $807 million for 158 deals in the quarter, representing a 14% decrease in dollars and a 19% decrease in deals over the previous quarter when $941 million was invested in 196 deals.

Dow Jones' VentureSource found that investments in information technology -- the largest investment category in its compilation -- reported growth to $1.53 billion from $1.33 billion in the first quarter a year ago. Even so, technology sector investments were at their second lowest totals since 2000. VentureSource said technology investors have been shifting their investments to clean technologies including renewable energy opportunities.

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