VC Numbers Look Good in Q2

PricewaterhouseCoopers and the National Venture Capital Association are the leaders in surveying venture capital investment deals and statistics. And the State Science & Technology Institute is the best at putting the numbers in perspective.

Below is part of the analysis from a strong second quarter of this year. Also, SSTI has a spreadsheet that breaks down investments by quarter over the past six years.

In the second quarter (Q2) of 2013, venture investment totaled $6.7 billion over 913 deals, according to the quarterly survey by PricewaterhouseCoopers (PWC) and the National Venture Capital Association (NVCA). Compared to the first quarter of 2013, the amount of venture capital investment increased 12 percent and the number of deals increased 2 percent. Although still well below venture capital investment highs in 2007, Q2 2013 had the largest total amount of investment in a year.

In total, $12.6 billion in venture investments has been made in the first half of 2013 in 1,776 deals. This represents a 3.8 percent decrease in the investment amount compared to the first half of 2012, but a slight uptick, 4 percent, in the number of deals completed.

The software and biotechnology sectors were the largest two recipients of venture capital investments. The software industry received $2.1 billion in investments, although this was a 7 percent drop from the previous quarter. Biotechnology rose 41 percent in investments to $1.3 billion in 103 deals. Other sectors receiving large totals of investments were IT ($654 million) and medical devices ($543 million).

Clean technology, which includes a range of activities across sectors, captured $364 million in 43 deals. This is a 6 percent investment decline and 31 percent deal decline, and is the lowest level since the fourth quarter of 2006.

Breaking investments down into company stage, seed and early stage companies together accounted for 57 percent of deals made, while expansion stage companies had 23 percent and later stage companies had the remaining 20 percent. Early stage companies closed on $137 million in 37 deals in Q2, while early stage companies had their highest levels of investments in six quarters.

First-time financings were also up in Q2, raising 24 percent to $1.1 billion, a 10 percent increase from Q1. The first-time financings were 17 percent of total investment amounts and 33 percent of total investment deals in the quarter.

Compared to the rather pessimistic survey from the first quarter of this year, and despite a decline in clean technology investments, this Q2 report appears to offer some optimism, with more than half of the sectors surveyed increasing in investment dollars.  In addition, a 39 percent rise to $1.9 billion was invested in “internet-specific companies” in Q2, with five of the 10 largest rounds in the quarter in the internet-specific sector. This suggests venture capitalists are looking for investment possibilities in more flexible and nimble companies with less overhead and low-capital-intensive operations.

 

 

In the second quarter (Q2) of 2013, venture investment totaled $6.7 billion over 913 deals, according to the quarterly survey by PricewaterhouseCoopers (PWC) and the National Venture Capital Association (NVCA). Compared to the first quarter of 2013, the amount of venture capital investment increased 12 percent and the number of deals increased 2 percent. Although still well below venture capital investment highs in 2007, Q2 2013 had the largest total amount of investment in a year.

In total, $12.6 billion in venture investments has been made in the first half of 2013 in 1,776 deals. This represents a 3.8 percent decrease in the investment amount compared to the first half of 2012, but a slight uptick, 4 percent, in the number of deals completed.

The software and biotechnology sectors were the largest two recipients of venture capital investments. The software industry received $2.1 billion in investments, although this was a 7 percent drop from the previous quarter. Biotechnology rose 41 percent in investments to $1.3 billion in 103 deals. Other sectors receiving large totals of investments were IT ($654 million) and medical devices ($543 million).

Clean technology, which includes a range of activities across sectors, captured $364 million in 43 deals. This is a 6 percent investment decline and 31 percent deal decline, and is the lowest level since the fourth quarter of 2006.

Breaking investments down into company stage, seed and early stage companies together accounted for 57 percent of deals made, while expansion stage companies had 23 percent and later stage companies had the remaining 20 percent. Early stage companies closed on $137 million in 37 deals in Q2, while early stage companies had their highest levels of investments in six quarters.

First-time financings were also up in Q2, raising 24 percent to $1.1 billion, a 10 percent increase from Q1. The first-time financings were 17 percent of total investment amounts and 33 percent of total investment deals in the quarter.

Compared to the rather pessimistic survey from the first quarter of this year, and despite a decline in clean technology investments, this Q2 report appears to offer some optimism, with more than half of the sectors surveyed increasing in investment dollars.  In addition, a 39 percent rise to $1.9 billion was invested in “internet-specific companies” in Q2, with five of the 10 largest rounds in the quarter in the internet-specific sector. This suggests venture capitalists are looking for investment possibilities in more flexible and nimble companies with less overhead and low-capital-intensive operations.

 

From Not So Good to Great?

Maybe, just maybe, that Rust Belt name will find its place in history. The Midwest has been stuck with that unflattering moniker for years. Deservedly so in many ways. But the Brookings Institution, no Johnny-come-lately to the think tank game, says in a recent report that the Great Lakes region could be the economic leader going forward.

The State Science & Technology Institute (based in Ohio, giving it extra incentive in this case) analyzed the report this way (with more than a few items and initiatives that are no strangers to Indiana):

The Next Economy: Economic Recovery and Transformation in the Great Lakes Region provides a roadmap for federal, state and local stakeholders to transition the Rust Belt into a forward thinking economy. It replaces the old economy, which was driven by highly-leveraged, domestic consumption, with an export-oriented Next Economy powered by a low-carbon energy strategy and driven by innovation that benefits all Americans.

The report outlines the many resources that can position the Great Lakes region as an economic leader. They include:

Global trade networks: Many of region’s cities rank among the top cities in terms of the share of their metro output that is exported;

Clean energy/low carbon capacity: Their blue-green potential due to the Great Lakes, waterways and abundant natural wind/solar resources position the region well in renewable energy generation; and

Innovation infrastructure: The region’s metros are home to 21 of the 32 major public and private research universities, which attract substantial federal research investment. Each year almost 36% of all U.S. science and engineering degrees come from schools in the region. The region also registers almost 33% of all U.S. patents.

To achieve this economic transformation, the region will have to address the deficient transportation infrastructure for trade, the concentration of energy-intensive industries, the lack of seed capital and the low educational attainment levels. To resolve these challenges, the report provides three key Next Economy drivers that will help federal, state and metropolitan leaders to maximize the region’s promise:

Invest in the assets that matter: innovation, human capital, and infrastructure: Even though budget cuts have become a regular occurrence, the researchers argue, long-range economic health is not just a matter of spending less, but spending and investing to spur growth. The region should concentrate its efforts on developing regional innovation clusters, instituting workforce development at community colleges and smart spending on infrastructure to facilitate trade.

Devise new public-private institutions that are market-oriented and performance-driven: Government leaders should be prepared to go to voters to support bond issues or dedicated tax sources for these institutions. They also can consider reorganizing money from programs and systems that are underperforming. These institutions include new infrastructure banks, advanced manufacturing labs, regional energy research and innovation centers and a venture capital fund of funds.

Reimagine metros’ form and governance structures to set the right conditions for economic growth: To achieve growth and innovation, cities and states must overhaul their physical redevelopment strategies and local governance structures in the Great Lakes region due to their significant population and economic declines. They must focus on right-sizing communities, green development and infrastructure and governance reform.

South Bend the Site for Climate Change Forum

Congress returns to work on September 8. On that same day, Hoosiers can learn more about climate change and energy legislation being debated in Washington — and how it might impact Hoosier businesses.

The Northwest Indiana Forum and Nucor are sponsoring the Climate Change Forum at the South Bend Marriott. The 90-minute event (11:30 a.m. to 1 p.m. with a complimentary lunch included) will tackle, in the organizers’ words: "the global scope of the climate change issue, the impact of greenhouse gases on our local communities, clean energy technology and recycling initiatives."

The goal: a focus on policies that create a sustainable balance between protecting our environment and developing our state’s business sector.

An RSVP is required. Call (866) 731-1929.

Jim Rogers Bringing Energy Philosophy Back to Indiana

So what has Jim Rogers, chief executive of Duke Energy, been up to in recent months?

  • Appearing on "60 Minutes" to support cap and trade, while also discussing on the show the necessity of carbon capture and sequestration of coal
  • Talking to the top players in China’s power industry about partnering on clean energy technologies
  • Being named the 2009 Citizen of the Carolinas by the Charlotte Chamber of Commerce (some of the past winners: Rev. Billy Graham, Dean Smith, Michael Jordan and Ben Bernanke)

Rogers "comes home" to Indiana on September 2 as the keynote speaker for the Indiana Conference on Energy Management. Rogers came to Plainfield-based PSI Energy in 1988 as chairman, president and CEO. Mergers led to similar roles at Cinergy in Cincinnati and then Duke, one of the nation’s largest energy companies.

“When Jim Rogers arrived at PSI Energy  in the late 1980s, he brought a level of enthusiasm and vision that challenged the historically conservative power industry,” declares Vince Griffin, who worked for Rogers at that time and is now the Indiana Chamber vice president of environmental and energy policy. “This is unquestionably a challenging time for the electric power industry. Jim Rogers will undoubtedly bring his passion and perspective to this energy conference."

Duke Energy is also looking at its Edwardsport, Indiana facility as a pilot project for the future with its investment in a 630-megawatt IGCC (integrated gasification combined cycle) facility.