California Business Minute™

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

Measuring venture capital investments and making sausage have a lot in common -
they are both very messy.  Two reports - Dow Jones VentureSource and MoneyTree
from PriceWaterhouseCoopers and the National Venture Capital Association
illustrate the mess, specifically third quarter results.

In all fairness, it has to do with methodologies according to Tracy Lefteroff,
global managing partner of venture capital at PriceWaterhouseCoopers. “The
difference boils down to varying methodologies, specifically that VentureSource
includes debt financing,” said Lefteroff in a press release.

RESULTS
The Dow Jones VentureSource finds that venture capital investments in the U.S.
dropped to $5.1 billion in 616 deals, down 38 percent year to year from the
$8.2 billion and 663 deals reported in the third quarter of last year. The results
point to what the VentureSource calls "the worst investment year since 2003."

Dow Jones VentureSource said that it totaled $458M in 66 deals in Southern
California, which it says was 48% less than last year. Venture capital activity
in the San Francisco Bay Area fell 33% in the third quarter.

According to the tally of venture capital investments, results were down 6% from
Q2. Were there any bright spots? Dow Jones reports that Web 2.0 investments nearly
doubled from first quarter, driving information services to $627M invested in

86 deals, an 11% increase from Q3 of last year. According to the report, investments
in the San Francisco Bay Area totaled only $2.2 billion, with 183 deals, down 33%
from Q3 of last year.

Conversely the MoneyTree report identifies that venture capital firms invested a
total of $4.8 billion in 637 transactions in the third quarter, up from the $4.1
billion in 657 deals in the second quarter but less than the $7.2 billion in 994
deals in the third quarter 2008.
Dollars invested in clean technology companies grew 89% to $898 million in the
third quarter; the number of clean technology deals grew 16% to 57 investments.

I’ll go get the mop.

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