VC investments climb in 2010

US Venture capital investment increased 19% in dollar terms and 12% in deal volume in 2010 compared to 2009, the first annual increase for venture since 2007.

Venture capitalists invested $21.8 billion in 3,277 deals in the US in 2010, a 19 percent increase in dollar amount and a 12 percent rise in deal volume over 2009, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association.

The spike in investments represents the first annual increase for US venture capital since 2007. Nearly every industry experienced double-digit increases in venture investments in 2010, including the clean technology sector, which rose 76 percent in dollars invested to $3.7 billion. The 267 deals in the sector in 2010 represents a 37 percent increase in deal volume year-on-year.

“The venture capital community found itself in a better position at the end of 2010,” president of the Mark Heesen said in a statement. “Increased investment across a diverse range of sectors highlighted those areas where the greatest opportunities lie, particularly within the Internet, software and clean technology industries.”

Investments in software in 2010 exceeded all other sectors, with $4 billion invested – a 20 percent rise over 2009 – in 835 deals, 21 percent more than in 2009. The $3.8 billion invested in Internet-specific companies represents a 28 percent increase in dollars, while the 729 deals closed for the industry represents a 14 percent rise in volume.

Approximately 30 percent more new companies received venture capital for the first time in 2010 compared to 2009, said Tracy Lefteroff, managing partner at PricewaterhouseCoopers.

Life sciences and the networking and equipment industries were the only two segments not to experience double-digit increases for the year. Data for the PricewaterhouseCoopers/NVCA report was provided by Thomson Reuters.