VC investing fell to lowest in 12 years in ‘09

Rebound predicted this year

Venture capital investing fell to its lowest level across the U.S. in 12 years in 2009 – to approximately $17.7 billion, according to the latest MoneyTree Report by PriceWaterhouseCoopers and the National Venture Capital Association. 2009’s venture investment level was a 37 percent decrease from 2008.

"The venture capital industry had no choice but to slow the investment pace in 2009," said Mark Heesen, president of the NVCA. “The weak exit environment resulting from an unstable public market combined with a challenged limited partner base sent a strong message to the venture community to pull back the reins – and the VC’s listened.”

VC investing in Wisconsin fell even farther than the national trend. VC investors spend $22.2 million in the state last year, compared to $64 million in 2008. Deal volume also fell – from 18 investments in 2008 to 11 last year.

Deal volume increased in the second half of 2009. There were only four deals in the first six months of the year, compared to seven deals in the last six months. Dollar value increased dramatically in the second half of the year: VC investors spent about $6 million in the first two quarters of the year and about $16.2 million in the third and fourth quarters.

Venture investing is expected to recover around the country in 2010, as many investors saw their portfolios rebound in the last nine months of 2009.

“The seed and early stage pipeline needs replenishing across all industries and the health of the start-up community in the next decade will be dependent upon more robust first-time financings,” he said. “2010 should be the year to begin that process in earnest."

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