Venture capital investments up, deals down in Q1

Venture capital firms invested $5.9 billion in 736 transactions in the first quarter of 2011, up from $5.6 billion in 827 deals in the fourth quarter, according to the MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association.

The first-quarter deal total is the lowest in a single quarter since the third quarter of 2009. By comparison, venture capital firms invested $5.2 billion in 787 deals in the first quarter of 2010.

Software companies received the most capital in the first quarter, with $1.1 billion in 187 deals, compared with $41.3 billion in 237 transactions in the fourth quarter and $809 million in 170 transactions in the first quarter of 2010.

Industrial energy was second in terms of capital invested for the latest quarter, at $1.03 billion in 75 transactions, followed by biotechnology companies, with $784 million in 85 deals, noted John Taylor, NVCA’s vice president of research in a conference call.

Clean technology, which includes portions of several of MoneyTree’s traditional investment sectors, had $1.04 billion in 69 deals in the first quarter, compared with $822 million in 62 transactions in the fourth quarter and $761 million in 78 deals in the first quarter of 2010.

When analyzed by the companies’ stage of development, later-stage companies garnered a bigger slice of venture capital investment in the first quarter, with $2.1 billion in 196 transactions.

The report uses data from Thomson Reuters.