Venture capital is back, in a very big way. Funding across all sectors has enjoyed double-digit percent increases across all sectors, for the first time since 2007. How much of the windfall lined the pockets of developers creating applications for Facebook?
PricewaterhouseCoopers and the National Venture Capital Association tallied $31.8 billion in 3,277 deals during 2010, a 12 percent gain over 2009. The fourth quarter of the year saw a total of $5 billion in 765 transactions, and the third quarter had $4.9 billion in funding among 789 individual deals. Funding for every stage in company development rose, except for seed funding, which dropped a mere two percent.
The press release put out by PWC and NVCA said:
Internet-specific companies also saw an increase in investing in 2010. The $3.78 billion going into 729 deals represented a 28 percent increase in dollars and 14 percent in deals from 2009 when $2.9 billion went into 638 deals. For the fourth quarter, Internet-specific investment increased 65 percent in dollars and 19 percent in deals with $1.2 billion going into 190 deals compared to $745 million going into 160 deals in the third quarter of 2010. ‘Internet-specific’ is a discrete classification assigned to a company whose business model is fundamentally dependent on the Internet, regardless of the company’s primary industry category. These companies accounted for 17 percent of all venture capital dollars in 2010, up from 16 percent in 2009.
Okay, that’s a lot of numerals to look at and none of it breaks out any specifics on social media funding, let alone Facebook. But we’ve previously seen data to the effect that at least one in every five venture capital dollars goes toward this subsector. That ratio applied to 2008 funding, and we wouldn’t be surprised to see something greater for 2010. Of course, we’ve asked spokespeople for PWC and NVCA for more detailed numbers to that effect, and will provide an update when we hear back.
Regardless, the increased venture capital talled for 2010 may trigger further gains this year, as investors will regard the increased venture funding as a sign that the economy has improved enough to sustain further growth.