Corporate venture capital investments surged in the first six months of 2007 to near-record levels, according to data from the National Venture Capital Association, PricewaterhouseCoopers and Thomson Financial.
Deal flow and the amount of money invested both surged, and so did the share of corporate venture capital in overall investments.
Companies invested $1.3 billion through June 30. That was good for 9.2 percent of all funds invested ($14.5 billion). That’s the highest percentage since 8.7 percent of all deals in 2001.
The total number of deals – 390 – is well ahead of the highest number in that category since 1,005 transactions in 2001.
For the same since months in 2006, corporate VCs participated in 352 deals and $1 billion.
Corporate venture capital is defined as money corporations invest directly in firms either by themselves or as part of syndicated offerings with traditional venture capital firms.
For example, NovaQuest, the venture arm of Quintiles Transnational in the Triangle, made 16 investments in 2006. In all, those deals were worth $342 million.
“Despite uncertainty in the U.S. economy, those corporations engaging in venture capital activity are
stepping up to the highest levels post-bubble,” said Mark Heesen, president of the NVCA, in a statement.
“In doing so, they are supporting some of the most exciting start-ups in their respective industries while providing themselves access to cutting edge innovations,” he added. “If corporate venture investment continues at this pace, we could see all-time record levels in the near future.”
In 2000, corporate VCs participated in 2,123 deals worth $16.5 billion.
Corporate venture capital is defined as money corporations invest directly in firms either by themselves or as part of syndicated offerings with traditional venture capital firms.
“Corporate venture capital, although lower in magnitude than private independent firms, is an excellent barometer of market optimism for this asset class,” said Darrell Pinto, director of Global Private Equity at Thomson Financial. “The positive momentum in corporate earnings and corporate M&A levels are complemented by an increasing allocation of corporate dollars to innovation which will likely fuel the continued year-over-year improvement in venture capital disbursements.”
Software deals led in percentage of corporate VC funding for the first six months of the year – some 20 percent. That’s up from 14 percent in 2006.
Biotech and medical device deals drew 19 percent and 15 percent of the 2007 deals.
“Strong investments from these corporations demonstrate a significant trend in terms of a growing reassurance in the marketplace,” said Tracy Lefteroff, global managing partner of the venture capital practice at PricewaterhouseCoopers. “These entrepreneurs represent some of the best and brightest thinkers of today and the increased level of funding from corporations is allowing them to continue building intelligent technologies. The future is bright for the progressive companies that are developing our technology of tomorrow.”
