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VC investments post 32% growth in Q2

Posted: 22 Jul 2009 ?? ?Print Version ?Bookmark and Share

Keywords:venture capital? hardware? communications?

Venture capital investments hiked 32 percent in Q2 to hit $5.27 billion, up from $4 billion in Q1, the lowest level in a decade, according to Dow Jones VentureSource.

The quarter was still well below the $8.33 billion level recorded in Q2 08. The rebound comes amid a shift in dynamics to fewer smaller deals.

The quarter also was the first in which investments in healthcare outpaced those in IT. The healthcare sector received $2.23 billion in investments in the quarter compared to IT which attracted $1.88 billion.

"Investors are diversifying their portfolios away from traditional investment areas like biopharmaceuticals and software toward segments like medical devices and information services while also pulling back on how much they are willing to invest in each deal," said Jessica Canning, director of global research for Dow Jones VentureSource.

Many major hardware electronics categories were down in Q2 from the previous quarter. Investments in communications slipped from $296 million to $258 million, computing fell from $237 million to $184 million and semiconductors slid from $170 million to $156 million.

Medical devices bucked the trend, rising significantly to $765 million in Q2 from $545 million in the previous quarter. Investments in renewable energy also were up, rising to $220 million in Q2 from $155 million in Q1 09.

The median deal size overall fell to $5 million in Q2, down from $8 million a year ago, the lowest median deal size since 1999. As usual, California dominated venture capital activity in the second quarter with 42 percent of the nation's deal flow and 46 percent of the capital invested.

- EE Times

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