Healthcare is certainly the bulls-eye for venture capitalist investors these days, Dow Jones Venture One and Ernst & Young reported Monday.
Life science device, drug and biotech firms landed $2.4 billion in deals, a quarterly total second only to the $2.9 billion invested in the first quarter of this year.
Medical device firms drew $1 billion in deals, which set a record, E&Y and Dow Jones reported. That’s 58 percent higher than a year ago, VentureWire, a Dow Jones publication, reported.
“For more than two years, we’ve seen steady growth in the amount of venture capital invested and the promising liquidity markets – on the public exchanges for technology companies and primarily in mergers and acquisitions for healthcare companies – look to be driving investor optimism,” said Jessica Canning, director of global research at VentureOne. “Healthcare continues to attract nearly one third of all venture capital dollars and medical device companies, interestingly, are converging with biopharmaceuticals as a major draw for investors.”
Nationwide, investors pumped $7.4 billion into companies, an 8 percent increase over the second quarter of 2006. So far this year, investments total $14.4 billion. Deals increased to 717, the highest number reported since 2001, according to VentureOne and E&Y.
Another sector attracting increasing interest in the quarter were companies focused on Web 2.0 software and applications, such as social networks, wikis and blogs. Investments increased to $979 million in 131 deals, increases of 52 percent and 56 percent respectively.
“This is the second quarter in a row that we’re seeing a record number of deals being done in the information services space, and this is due in part to the high-profile liquidity events we’ve seen over the last year,” Joseph Muscat, director of the E&Y Americas capital advisory group, said.
“With Web 2.0 companies able to fully develop products and begin generating revenues very quickly with comparatively small amounts of capital, they are certainly seen as lower-cost investments with a high potential for return,” Muscat added.