Venture capitalists put more skin in fewer deals during the 1st quarter, amid an overall decline in life science deals, according to a survey of VC shops.
The number of deals for the medical device & equipment sector dropped 37% to 61 transactions, but the total value of those deals rose 28% to $588 million, according to the MoneyTree report from PricewaterhouseCoopers LLP and the National Venture Capital Assn., based on data provided by Thomson Reuters.
Overall investment in life science companies was down both in terms of volume and value, according to the report. There were 173 deals worth $1.69 billion for the life science sector, representing declines of 28% and 10%, respectively.
Biotech, the 2nd-largest industry in terms of total value after software, also posted dual declines. The 112 biotech deals worth a collective $1.1 billion logged during Q1 represented slides of 21% and 23%, respectively, compared with Q4 2013.
All told there were 951 deals worth $9.5 billion during the just-ended quarter, for a 14% decline in the total number of deals but a 12% increase in value, according to the report.
"Context is everything, and when you consider the context behind the numbers, you start to understand why there was a shift in the 1st quarter of 2014. Seed and early-stage financing numbers are down from the previous quarter, but expansion-stage dollars invested are up 34%. This was to be expected when you consider the domination by seed and early-stage deals in 2012 and 2013," NVCA president & CEO Bobby Franklin said in prepared remarks. "Because these companies are now moving to the next stage of their maturing process, the investment rounds tend to be bigger, which explains why the numbers are trending toward the later stages of the investment calendar. To be sure, the spring thaw of the exit markets is providing some firms with new life, but overall capital remains constrained for most venture capital firms."
