Enterprise IT companies were conspicuously absent from the list of the 10 largest venture capital deals struck during the third quarter, as the growing market for alternative energy and other “clean tech” companies piqued investors’ attention.
Of the nearly $750 million that investors poured into the top 10 deals of the third quarter, only $124 million went into start-ups building enterprise IT products. The remainder of the 10 largest deals broke down as follows: four investments in energy companies, two in medical device makers, one in a biotechnology company, and one in a healthcare company, according to MoneyTree Report from PricewaterhouseCoopers (PwC) and the National Venture Capital Association based on data provided by Thomson Financial.
Overall, venture capitalists invested $7.1 billion in 887 deals during the third quarter, down slightly from the $7.2 billion invested in 1,000 deals during the second quarter.
The MoneyTree Report recently began tracking a market segment called clean tech, which it defines as companies dealing with alternative energy, pollution and recycling, and power supplies and conservation. While this segment is still emerging, it’s growing quickly; 62 clean tech companies received investments in the third quarter totaling $844 million, up 40 % from the same period last year.
“While clean tech companies don’t make up a large percentage of the total amount of dollars that are going into venture-backed companies, it did account for about 7% of the dollars and about 12% of the deals, and we see the significant increase of interest in these companies in the last couple of year,” says Tracy Lefteroff, global managing partner of PwC’s venture capital and life sciences industries services.
Software during the third quarter maintained its recently regained title of category with the most deals, with $1.11 billion going into187 start-ups, says the report.
“Enterprise software and services was still a contrarian investment category only a year ago; we see that changing quickly as there are more and more very interesting enterprise deals and interesting entrepreneurs coming to market and finding a warm reception from customers because of the low cost of their solutions and the ability to actually go and service those problems and those needs without having to rely on and burden IT departments even more,” says Bryan Stolle, general partner, Mohr Davidow Ventures.
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