Monday, October 18, 2010

Venture Capital Investments Down 7%

By David Gross

PriceWaterhouseCoopers and the National Venture Capital Association's quarterly VC numbers came out last week, and Q3 numbers are 7% lower than last year, with venture investment dropping to $4.8 million from $5.2 million for the same period last year.

Much of the decline is due to a drop in alt energy/clean tech funding, as VCs have come to realize that solar manufacturing is indeed a big opportunity, so big that it requires nearly $1 billion in sales for a typical solar supplier to break-even.   Clean tech investment fell to $652 million last quarter from $1.5 billion in the second.

The news actually starts to look good for early stage companies, with first round financing past the seed stage rising 60% to 1.2 billion on 255 deals, up from 176 a year ago.   But to put this in some perspective, we've seen $369 million raised by data center providers in just the last few weeks, representing a mix of preferred stock, bank debt, and equipment financing.    VC is still an important component of data center financing, but few industries much data centers' ability to mix venture capital with such a wide range of debt and equity sources.

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