VENTURE CAPITAL GROWTH -1ST QUARTER 2008 RESULTS

PricewaterhouseCoopers and the National Venture Capital Association (NVCA) released their quarterly venture capital numbers. The report, which is based on data from Thomson Reuters, found that nationwide, there was $7.1B invested in 922 deals in the first quarter, down 8.5 percent from the fourth quarter when there was
$7.8B in 1045 deals. The firms said that 11 of the 16 industries tracked by the report saw a decrease in levels
of investment, and 14 of the 16 with declines in deal volume.
 
According to numbers from the report, Silicon Valley continues to lead the nation in both deals and dollars,
with nearly $2.6B over 306 venture capital deals in the quarter. Southern California was still number two in
the nation in terms of dollars, just ahead of New England, which had $721.5M invested in the quarter. However, New England saw more venture deals, with 108 compared with Southern California's 93.

SLOWING?
OK, this is where it gets a little fuzzy- as in math. As you will read the report identified that there is less money being invested. However, if you add the totals for California, the total sum of venture capital invested in the state is on par with last year, $13.9 billion.  So, for example, the first quarter of 2008, the total was just over $3.4 billion.  If you take the total as an average and multiply by four (quarters) it will be nearly the same as total from 2007. 

Nevertheless, this was the first year-over-year decline in the venture capital industry's quarterly investments since the end of 2005, based on the data.

In last year's first quarter, venture capitalists invested $7.5 billion. Despite the decline, the $7.1 billion invested during this year's first quarter was the fifth-largest amount in a single quarter since 2001. Although there were fewer dollars disbursed by venture capitalists, more deals got done in this year's first quarter than last year's - a total of 922 compared with 861 last year.

The first quarter's smaller average deal size - $7.7 million, down from $8.8 million - could mean the entrepreneurs whose ideas were funded didn't need as much money or it could reflect greater caution among venture capitalists.

For now, industry officials are confident investment will pick up in the months ahead. The January-March period usually is the slowest time of the year for venture capital deals. "We do not expect to see significant declines in investment levels in the coming year," said Mark Heesen, president of the National Venture Capital Association.

NORTHERN CALIFORNIA
Contrary to the national trends, investments were up in Silicon Valley by about 8 percent, year- over-year from $2.4 billion to $2.6 billion, although numbers were down from the previous quarter.

The top six areas of venture investments in Silicon Valley during the first quarter of 2008:
-- Software: $494 million, 76 deals
-- Semiconductors: $344.9 million, 25 deals
-- Medical devices and equipment: $340.5 million, 29 deals
-- Telecommunications: $262.4 million, 24 deals
-- Media and entertainment: $227.9 million, 39 deals
-- Biotechnology: $226.6 million, 25 deals

SOUTHERN CALIFORNIA
Southern California had venture capital investments totaling $856.8 million (M) for the first quarter of 2008, invested in 93 companies. That compared with over $1.1 billion in 85 companies invested in Q1 of last year, however was up over last quarter, when Southern California saw $731M in investments in 89 companies.
 
In the Southern California region, the San Diego area lead the area with $455.7M in venture investments for
the quarter, followed by Los Angeles with $249.4M invested. Orange County received $151.8M in venture
capital investments.
 
In Southern California, Biotechnology by far was the industry with the most investments, with investments
worth $251.0M. Medical Devices had nearly $196M in investments and Industrial/Energy investments--which includes clean technology and green technology companies was third with $73M in total funding.