Deals made by the venture capital arms of major companies fell for the fourth straight quarter—a clear sign that corporate VCs are being more conservative than independent investment firms are—according to a report released today by New York-based deal tracker CB Insights. Corporate VCs participated in 11 percent of all venture deals in the first quarter of 2012, investing a total of $1.09 billion in 84 startups. That’s actually the lowest dollar sum invested by corporate VCs in the last five quarters.
There were a couple of bright spots in the overall downward trend, however. Corporate VC funding for Internet companies rose 30 percent in the quarter, marking the third straight quarterly increase for the sector. And CB is predicting that corporate funding for mobile startups will explode in the second quarter of this year due to the “Instagram Effect”—the April 9 revelation that Facebook is buying photo-app maker Instagram for $1 billion. Funding from in-house VCs into mobile and telecom companies actually fell 45 percent between the fourth quarter of last year and Q1 2012, but CB has already tracked $120 million of such deals in Q2—a 62% increase over the previous quarter.
As for other sectors, healthcare and cleantech struggled to catch the attention of corporate VCs in Q1. Dollars invested in healthcare startups dropped 39 percent from the previous quarter to $173 million, and the number of deals fell from 22 to 14. And large companies invested just $145 million in nine cleantech startups—a steep dollar drop from the previous quarter, when they funneled $326 million in eight deals.
Green investing is still hot in Texas, however, which explains why that state accounted for 6 percent of corporate venture dealmaking in the first quarter. In fact, Texas nearly overtook New York for the No. 3 spot in corporate VC, behind California and Massachusetts, which nabbed 54 percent and 24 percent of deals respectively. (New York was home to 7 percent of corporate VC deals.)
Drill down to the individual states in the Xconomy network and some interesting trends begin to emerge. In California, the Internet sector definitely ruled in the first quarter, taking 42 percent of all corporate VC money. Among the top money-raisers were
