Software Surge Drives Up U.S. Venture Activity—and Top 10 Deals

Overall venture capital activity turned up sharply during the three months that ended June 30, with venture firms investing just over $7 billion in 898 deals throughout the United States, according to the latest MoneyTree survey.

The study generally confirms the improving trend in VC activity that was highlighted in the quick take from CB Insights, which we covered earlier this week.

But where CB Insights saw the highest totals in a decade, the MoneyTree Report suggests the engine driving the innovation economy doesn’t have as much horsepower as it has in the past. While software startups attracted more capital than any other sector during the quarter, venture activity in the life sciences sector plunged in both dollars and deals.

The MoneyTree Report, which provides a detailed assessment of quarterly VC activity, is compiled by Pricewaterhouse Coopers and the National Venture Capital Association (NVCA), using data from by Thomson Reuters.

After lagging behind life sciences investments for many years, “It’s exciting to see software take the lead for VC investments in the second quarter,” says Adam Marcus, a partner with Boston-based OpenView Ventures. The $2.3 billion that VCs invested in 290 software deals during the quarter was the biggest amount since the second quarter of 2001, when VC investments in software deals totaled more than $3 billion nationwide. Software deal activity was closer to par—the previous high was 296 deals in the third quarter of 2011.

Internet-specific startups attracted $1.8 billion in 261 deals, marking the second-highest level of Web investments in more than a decade. The top 10 deals for the quarter included two Internet-specific investments (see list below).

Overall, the $7 billion and 898 deals that the MoneyTree report counted in the second quarter represents a 17 percent gain in terms of

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Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.