Tuesday, February 21, 2012

CORPORATE VENTURE CAPITAL ACTIVITY ON THREE-YEAR UPWARD TREND

Corporate VC Investors Steadily Participating in Increased Share of Total VC Deals

Over the last three years, corporate venture capitalists (CVCs) have steadily increased investment activity, participating in 15 percent of all venture capital investment deals in 2011 according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association (NVCA) based on data by Thomson Reuters. This participation rate compares to 2010 when corporate VCs were involved in 13.6 percent of all venture capital deals and 12.7 percent of all deals in 2009. In 2011, CVCs invested $2.3 billion into 551 deals compared to $2.0 billion into 481 deals in 2010, a 15 percent increase in dollars and deals for the year.

“Corporations bring a unique and specialized perspective to venture investing and are increasingly becoming more active in supporting the growth of emerging technologies. In turn, the venture capital industry has embraced the CVCs’ depth of resources - including R&D, access to broad marketing channels and operating experience - as invaluable contributions to the success of the startup economy,” said Mark Heesen, president, National Venture Capital Association.

Driven by strong clean tech investment, CVCs put the most money into the Industrial/Energy sector where $974 million was invested in 95 deals. The MoneyTree report also showed that CVCs participated in more than one-fifth (22 percent) of the Clean Tech deals and provided nearly 15 percent of financing in the sector since the beginning of 2010. Similar to 2011 trends in traditional venture capital investment, CVCs were most active in the Software sector in 2011 where they invested $883 million in 284 deals. Biotechnology ranked second in terms of the number of deals where 172 rounds comprising $694 million were completed.

"It's not surprising to see corporate venture capitalists becoming even more active in the Biotech sector," noted Tracy T. Lefteroff, global managing partner of the venture capital practice at PricewaterhouseCoopers. "Larger biopharma companies have recognized that their expertise does not lie in early stage R&D - the smaller, more nimble venture-backed companies are more efficient at drug development. Accordingly, the larger biopharma companies are looking to these venture-backed companies to help fill their pipeline as many of their blockbuster drugs are coming off patent. Bringing corporate venture capitalists to the table early in the company's development helps ensure that there will be interest in the drugs being developed and identify a potential acquirer early on, thus allowing the VCs to deliver more expedient returns to their investors."

To read the chart below, read across:
Year; Corporate Venture Investment: Deals $; Total Venture Investment: Deals $; % Total Deals; % Total $

2002 551 $1,905.9 3,183 $20,849.5 17.3% 9.1%
2003 447 $1,296.0 3,004 $18,613.8 14.9% 7.0%
2004 528 $1,548.7 3,179 $22,358.7 16.6% 6.9%
2005 535 $1,557.2 3,262 $22,945.70 16.4% 6.8%
2006 636 $2,031.5 3,827 $26,594.2 16.6% 7.6%
2007 777 $2,609.4 4,124 $30,829.0 18.8% 8.5%
2008 783 $2,263.5 4,113 $30,546.6 19.0% 7.4%
2009 390 $1,428.4 3,066 $19,751.8 12.7% 7.2%
2010 481 $1,999.8 3,526 $23,243.7 13.6% 8.6%
2011 551 $2,331.7 3,696 $28,454.5 14.9% 8.2%

“The venture-backed community represents an immense source of creative ideas. Aligning objectives through investment and integrating complementary capabilities assures that solutions can be brought forward at a scale that matters," said Mary Kay James, DuPont Ventures and NVCA Corporate Venture Group Advisory Board Member. "Given these benefits we anticipate the total amount of CVC investment and the percentage contribution to the overall venture investment totals to continue to steadily increase in the coming year and beyond."

No comments:

Post a Comment