Venture capital investment has followed its usual pattern with a reported slowdown in the third quarter, according to a quarterly venture capital report.
The report, released by Ernst & Young LLP and VentureOne, reveals that, during the quarter, $4.56 billion was invested in 467 deals, but when this is compared with the third quarter of last year, both the deal-count and the amount invested were down 4%.
A significant portion of investment was for seed and first-round deals, which made up 32% of all venture-capital deals during the quarter, compared to only 28% during the same period a year ago. The $965.8 million invested in these deals represented a 32% increase over the amount invested a year ago.
Yet this positive development was offset by the decline in the number of second-round deals completed in the quarter, as well as the amount invested in those rounds. This could be a result of fewer initial deals being completed during the last few years, leading to a dearth of companies in line for second-round financings.
For the venture-capital market as a whole, healthcare deals made up 25% of the quarterly deal-flow, the industry’s highest percentage this year. Healthcare also received 32% of the total amount invested.
On the IT side, the average amount invested in early-stage IT companies was also on the rise – reaching $5.7 million in first-round deals, the highest first-round average since the fourth quarter of 2002.
Overall, the investment in IT companies declined from the first two quarters of the year, with 272 deals and $2.50 billion invested in the third quarter. The money invested, however, was 8% higher than a year ago.