Corporate VC at highest level in 6 years

Corporate venture capital firms did 390 deals worth $1.3 billion in the first half of 2007, the highest level of investment seen since the dot com crash.

Corporate venture capital firms invested $1.3 billion (€953 million) into 390 deals in the first half of 2007, a 30 percent increase in terms of investment dollars from the same period last year.

The amount is the highest level of corporate VC capital spent since 2001, when corporate VCs did 573 deals worth $3.2 billion in the first half of the year, according to a MoneyTree report by PricewaterhouseCoopers and the National Venture Capital Association based on Thomson Financial data.

“We certainly see that we are continuing to grow and put more dollars out the door,” Reese Schroeder, managing director of Motorola Ventures told PEO. “You’re likely to see a record kind of year for us in terms of total dollars invested.”

Schroeder added that an increasing number of companies, both small and large, have expressed interest in establishing corporate venture capital groups. IBM and Intel are among the corporations with venture capital arms.

Corporate venture capital activity accounted for 21.4 percent of the total VC deals and 9.2 percent of the total dollars invested in the first half of the year. During the first part of 2006, corporate VC activity accounted for 19.8 percent of all deals and 7.5 percent of total dollars invested.

“Corporate venture capital, although lower in magnitude than private independent firms, is an excellent barometer of market optimism for this asset class,” Darrell Pinto, director of Global Private Equity at Thomson Financial, said in a statement. “The positive momentum in corporate earnings and corporate M&A levels are complemented by an increasing allocation of corporate dollars to innovation which will likely fuel the continued year-over-year improvement in venture capital disbursements.”

Corporate investments were heaviest in expansion and later stage companies, with software accounting for 20 percent of total investments, biotechnology for 19 percent and medical devices and equipment for 15 percent.