Determining if investment conditions are improving can be difficult when the two common measures of progress, improvement as compared to the previous quarter and improvement as compared to the same quarter last year, paint different pictures. This week, New York’s CB Insights released information about Quarter 3, 2010 venture funding. In Massachusetts, the total dollar value of venture capital deals hit a five-quarter low of $466 million across 87 deals. While the number of deals was comparable to past quarters, it was 14 deals greater than Quarter 3, 2009. (Image courtesy: http://bit.ly/dC5Rmu)In Quarter 1 of this year, Massachusetts saw $596 million in venture funding, or over 22% more funding than Quarter 3. In Quarter 2 of this year, Massachusetts saw $689 in venture funding, or over 30% more funding than Quarter 3. Nationwide, the trend of fewer dollars invested over more deals was also realized for Quarter 3, with $5.4 billion invested across 715 deals.
Nationwide, the healthcare sector received the most funding at $1.75 billion. California, Massachusetts, and Pennsylvania accounted for 53% of total healthcare funding, or about $92.7 million. Massachusetts received $228 million in healthcare funding this quarter, or 13% of the national figure, which was down from Quarter 2’s 23% of national healthcare capital. Within the state, healthcare accounted for 37% of deals and 49% of dollars invested, making healthcare the largest investment sector in the state by both indicators.
The internet sector received the largest number of deals
nationally last quarter at 233, which accounted for just over $1.25 billion in capital. While these numbers were down from Quarter 2, 2010, they were up as compared to Quarter 3, 2009, when just $1 billion was invested in the internet sector across 194 deals. Comparable to the healthcare sector, three states dominated the internet sector, accounting for 70% of the deals and 70% of the capital: California, New York, and Massachusetts. Massachusetts also realized a partial shift in funding from the healthcare sector to the internet sector this quarter. (Image courtesy: http://bit.ly/cRp4iq)It is not surprising that the top five deals in Massachusetts for Quarter 3, 2010 all involved healthcare companies: Dicerna Pharmaceuticals, Euthymics Bioscience, Matamark Genetics, Rhythm Pharmaceuticals, and Good Start Genetics. The top three cities in the state for Quarter 3 by dollars invested were: Cambridge, with 17 deals valued at $82 million total; Boston, with 11 deals valued at $78 million total; and Watertown, with 2 deals valued at $28 million total. Marlborough, Woburn, and Braintree followed close behind the leaders, taking in $27 million, $25 million, and $24 million in Quarter 3 funding, respectively.
While it is apparent that Quarter 3 investment activity was not as optimistic as people may have hoped for, it is not entirely disappointing. Money is still flowing, and Massachusetts is still holding a spot close to the top in key sectors. Of course, seeing the number of state deals increase as compared to last year also means that more businesses got the boost they needed last quarter. With just one quarter left in the year, let us hope we can end on a high note.
[Sources: http://bit.ly/anfXsq, http://bit.ly/cVOwmc, http://bit.ly/aquLzl, http://bit.ly/dC5Rmu]
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