California Business Minute™

Hi, I am Tim Johnson and welcome to the California Business Minute.

According to the latest numbers from the MoneyTree Report from PricewaterhouseCoopers
and the National Venture Capital Association (NVCA), based on data from Thomson
Reuters, investments in 2009 were at the lowest level since 1997, with only $17.7
billion invested across 2,795 deals during the year nationally. That was a drop of
37 percent in terms of dollars, and 30 percent in terms of deal volume for the year.

Meanwhile, according to a similar and timely report by Dow Jones VentureSource, 2009
saw 2,489 deals completed and $21.4 billion in venture capital invested in U.S.
companies, a 31 percent drop from 2008 when $31 billion was invested in 2,817 deals.

The two reports don’t always count the same deals, partly because of differences in
data-gathering and in the definition of venture capital, but we feel it is important 
to present both to our readers according to Dr. Robert Harmon of the California
Business Minute

In a statement, NVCA President Mark Heesen said "The venture capital industry had
no choice but to slow the investment pace in 2009," explaining. "The weak exit
environment resulting from an unstable public market combined with a challenged
limited partner base sent a strong message to the venture community to pull back
the reins -- and the VC's listened," said Heesen.

In a statement, Jessica Canning, global research director for Dow Jones VentureSource
said “Venture capitalists are still treading lightly when making investments.”  “In
the fourth quarter, venture deal activity returned to levels seen before the collapse
of the financial markets, but capital invested continued to lag as investors gave
companies just what they need to reach the next milestone.”

Closer to home, according to the MoneyTree Report, it was identified there was
$587.8M invested in Southern California in Q4. Those numbers were up from both Q3,
when $506.9M was invested in Southern California, as well as Q4 of last year, when
$508.2M was invested in the region. San Diego led the region in terms of venture
deals for the quarter with $300M invested, followed by Los Angeles with $239.1M
in investments and Orange County saw $48.7M in investments. By industry, Southern
California saw its biggest investments in Biotechnology, with $195.6M invested,
the majority of it invested in the San Diego area. The Industrial/Energy sector
ranked second with $95.16M in investments, followed by Software with $63M in
investments and Medical Devices and Equipment with $60.3M in investments in for
the quarter.

Additionally, the Money Tree Report identified that venture capitalists invested
$1.9 billion in Silicon Valley companies during the fourth quarter.  Unfortunately,
the total sum of $6.98 billion invested in firms in the Silicon Valley in 2009 was
a 35 percent decline from 2008 levels.

But no story would be complete without positive news and that is California still
leads the nation in venture capital activity with nearly $10 billion in investments
made, comprising over 56 percent of the total for the nation in 2009.

I am Tim Johnson and this has been the California Business Minute.