In 2006, financings reached their highest levels since 2001, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association, based on data from Thomson Financial. Venture capitalists poured $25.5 billion into 3,416 deals in 2006, 12% more than the $22.8 billion that 3,100 companies pulled in during 2005.
There was some reaction to the numbers on a call to discuss the results. US Venture Partners' Steve Krausz:
"What we saw in '06 was a return to early-stage. I think it is some of the freeing up of capacity. I also think it represents a better valuation scenario and a better M&A environment. Acquirers have been willing to pay a little bit more, and the IPO market, although it was small in numbers, has picked up a little bit." Looking ahead, Krausz is interested in wireless infrastructure, wireline growth driven largely by video, monetizing ad revenue in video and social networking, as well as casual gaming, business analytics and software as a service.
Boston-based Polaris Venture Partners' Terry McGuire:
He said during the call that the growth in life sciences is due to three things: positive M&A exits as well as companies that had gone public in earlier years doing well, so evidence of dollars well-invested; an increased need from pharmaceutical and med tech companies for products to fill their pipeline; and later-stage deals. Some hot life sciences areas right now include: platform technologies, proteins, startups addressing pandemics and products, and smart devices to deliver therapeutics and spinouts. "If I look at 2007, I expect it to be a lot like 2006 — a good year of growth, a good year of opportunity."
Despite the optimism, activity may be peaking. Investment for the fourth quarter, which totaled $5.7 billion spread across 802 deals, was down from the $6.6 billion invested in 862 deals in the previous quarter — and the lowest for any quarter in 2006 — but it marked a slight, $20 million increase over the fourth quarter of 2005.
For more on the NVCA data, see:
The Deal
Southwest Venture
Tags: m&a, vc, venture+capital
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