The year-long tailspin in venture-based activity ended on an up note, according to Dow Jones VentureSource. In Q4, 2009, venture investors invested $6.3 billion in 743 deals, up slightly from the $6.1 billion invested in 619 deals during the previous fourth quarter.
Overall, there were 2,489 deals completed and $21.4 billion in venture capital invested in 2009 in US companies. That represented a 31% drop from 2008, when $31 billion was invested in 2,817 deals.
“Venture capitalists are still treading lightly when making investments,” said Jessica Canning, global research director for Dow Jones VentureSource. “In the fourth quarter, venture deal activity returned to levels seen before the collapse of the financial markets, but capital invested continued to lag as investors gave companies just what they need to reach the next milestone.”
2009 was also notable in that for the first time ever, the healthcare industry raised more VC capital than the Information Technology (IT) sector. Healthcare deals garnered $7.7 billion across 701 deals last year, a 14% drop from the previous year. That compared favorably to IT, in which VCs risked $6.1 billion in 817 deals last year, a 35% drop from 2008 and the industry’s weakest year since 1996.
The majority of VC money in health care went to biopharmaceutical companies, which raised $4.2 billion over 302 deals. Medical devices came in second at $2.9 billion for 291 deals.
The Energy & Utilities sector experienced a profound decline in VC investment last year. Companies in this sector raised just $1.2 billion in 87 deals in 2009, less than a third of the amount raised in 2008.
The median round size of venture deals in 2009 was $4.7 million, down from $6 million in 2008, according to VentureSource. Later-stage deals accounted for the largest slice of deal activity, attracting $11.4 billion in investment, whereas seed- and first-round deals garnered $3.7 billion.