Good Time for starting entrepreneurship – seed and early stage VC funding rise sharply in 2010
Saturday, 24 July 2010 13:53

Venture capitalists invested $6.5 billion in 906 deals during April-June 2010. Significant part went in seed- and early-stage companies and clean technology–oriented startups.

In Q1-Q2 2010 (Jan – Jun), venture capital (VC) investments totaled $11.4 billion going into 1,646 deals, according to National Venture Capital Association

Seed- and early-stage companies accounted for $2.3 billion in investments during the second quarter, while the actual number of seed- and early-stage deals jumped 32 percent to 429 compared to Q1 2010 [NVCA Press Release]

Seed- and early-stage companies received the bulk of first-time investments in Q2, garnering 63 percent of the dollars and 73 percent of the deals.
There has been a marked increase in the number of companies being funded in Silicon Valley. This increase in investment activity, especially around consumer web and mobile applications has been spurred on by the rise of super angels, who have emerged as a dominant new economic force in a rapidly changing startup ecosystem.

Green technology and life sciences sectors are expected to be the focus of this year's investments, the group said.

During the first quarter, the biotechnology industry received the highest level of funding for all industries with $825 million going into 99 deals, followed by the software industry with $681 million in 144 deals. The green technology sector attracted $773 million in 44 deals
Q2 2010 showed a total of $7.7 billion invested across all sectors.
Consumer Information Services sector — a web-heavy vertical that includes many of the social media startups is showing signs of recovery, even in seed and early-stage deals. Online communities are showing a heavy concentration of activity.


The biggest hit in Information technology sector is software. In IT, companies raised a total of $1.9 billion in 231 deals. This is a YOY increase from 208 deals raising $1.6 billion in Q2 2009.
Early stage deals represent almost 42% of VC deals in the quarter and only 18% of funding.  The trend towards more small deals continues.

The greater number of small deals was most clearly visible with the increase in the number of deals deemed Seed VC deals.  With large existing funds and new smaller funds emerging to make bets on earlier-stage companies, Seed VC rounds continued their strength.