Venture capitalists were more active during the 4th quarter of 2007 than they were during the same period a year earlier and during the 3rd quarter of this year, according to a new survey.
“Venture investing is still very healthy …we are looking at and seeing terrific business opportunities for solid innovations,” said Julia Spicer, executive director of The Mid-Atlantic Venture Association, which released the survey.
According to the survey taken among MAVA’s members, 89 percent closed at least one new investment deal in the fourth quarter, up from 64 percent in the third quarter of this year and 72 percent in the fourth quarter of 2006. Despite last year’s growth, the number of deals forecasted for the first quarter of 2008 is slightly lower. Only 77 percent of the venture capitalist0s queried expected to close at least one deal in the first quarter of 2008.
Investors received more business plans in the fourth quarter, with 49 percent seeing 100 or more a month, up from 38 percent in the third quarter. Deals also closed more quickly, with 31 percent closing in 1-3 months in the fourth quarter, up from 23 percent in the previous quarter, and 63 percent in 4-6 months, up from 56 percent.
Even though there are overall economic concerns, venture capitalists are “still deploying capital,” said Spicer. A number of sectors, such as life sciences, technology, energy, and health care, are doing well, and innovation is still driving them. In the fourth quarter, 71 deals, worth $403.9 million, were closed, up from 38 deals worth $351.4 million in the third quarter and 53 deals worth $189.4 million in the fourth quarter of 2006. In 2007, in the metro area, 207 deals were closed valued at about $1.24 billion, compared to 2006, when 209 deals were closed, but only totaling $1.15 billion.
Investors think that 2008 “should be roughly on par with 2007,” said Mark Esposito, director of Entrepreneurial and Venture Capital Advisory Services for PricewaterhouseCoopers’ mid-Atlantic region. Even in the face of a possible recession and trouble in the credit market, the “foundation is solid for at least another year” in the venture world, Esposito told The Examiner.
Software and technology spending topped the list for investment in the region with life sciences in second place and telecommunications third. Life sciences will remain strong, with investments by pharmaceutical companies, said Esposito. Clean technology investments, he added, may be overvalued in the long term.
