The California Business Minute
Venture Capital Results, 3rd Qtr.
10-22-08
Hi, I am Tim Johnson and welcome to the California Business Minute.
The third quarter results have been released for venture capital activity for the third quarter
by PricewaterhouseCoopers and the National Venture Capital Association and also from
DowJonesVentures.
Nationally, PricewaterhouseCoopers reported there was $7.1B in 907 deals for the third quarter,
down 7 percent compared with Q2. However, it does not appear that the overall economy has
yet hit the numbers specifically in the Bay Area.
Dow Jones VentureSource identified in their report that the Bay Area/Silicon Valley saw an
increase by 22 percent as it continues to easily lead the nation in venture capital deal totals,
with $2.7 billion in 292 venture deals for the quarter. Mill Valley-based Solar Power Partners
and Menlo Park-based Pacific Biosciences of California led the way, raising $100 million each.
The local numbers bucked a national trend, which saw a 7% drop in venture capital invested --
the second straight quarter of year-over-year declines. "Clearly, the current economic crisis is
already impacting the venture industry, which has traditionally been relatively insulated from
fluctuations in the broader economy," said Jessica Canning, the director of global research at
Dow Jones VentureSource. "With the IPO market likely to be shut down for some time, venture
capitalists are pulling back on investments in technology companies.
Southern California, which had been ranked second in the nation in terms of venture capital activity
for a number of quarters, slipped to third for the third quarter as Boston regained the lead with
$834.1M over 117 deals, versus the $751M associated with the 76 deals in Southern California.
The biggest deals in southern California for the quarter were Santa Monica-based SolarReserve,
raised $140M in a clean technology funding; Irvine-based electric automaker Fisker Automotive
scored $65M; San Diego based renewable petrochemical maker Sapphire Energy raised $35M,
and Laguna Hills-based Glaukos, which develops medical devices for treating glaucoma raised
nearly $35M.
Commenting on the possible impact of the financial crisis on venture markets, Randy Churchill,
Director of Business Development for PricewaterhouseCoopers Southern California venture capital
practice, commented in a statement that "We ... do not expect venture funding to dry up. Venture
capitalists have slugged through difficult economic times before and this one should be no different.
They are long-term investors and won't jump ship just because the times are tough. "
I am Tim Johnson and this has been the California Business Minute.
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