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Private Equity-Backed Venture Capital Investment and Exit Activity – December 2012

by Jonathan Parker

  • 06 Dec 2012
  • PE

In the year to date, 28% of the total number of venture capital financings has been focused on the internet sector, making this the most attractive industry for venture capital investment for the third year in a row. The second most common industry for venture capital financings is healthcare, with 18% of the total number of deals; software and related companies are close to this amount on 16%. Firms in the telecoms industry received 11% of the total number of financings, while 8% of deals were focused on other IT companies.

In terms of the number of exits, the internet sector has again been the most active, with 25% of the total number of venture capital exits in 2012. Software and related companies saw 17% of all exits, while exits from venture capital healthcare investments represented 16% of the total. Exits from other IT companies accounted for 13% of the total number of venture capital exits, with exits from telecoms investments totalling 11% of all exits in 2012 so far.

While certain industries, such as internet, are growing in relative prominence with regard to the number of venture capital financings, others have seen a fall in the number of investments as a proportion of the total. Clean technology is one such industry, with investment levels falling from 7% of all financings in 2010 to just 4% in 2012 to date. Across this period, exits from venture capital investments in clean technology companies have risen overall, from 2% of all exits in 2010 to 3% in 2012. In contrast, investments in software and related companies have risen slightly from 15% in 2010 to 16% in 2012. Meanwhile the number of exits from companies in this sector has fallen relative to total exit levels, with 17% of all exits occurring in this industry in 2012 compared to 22% in 2010. These two factors combined suggest a recent trend of growth in net investments in software and related companies, relative to investments in other industries.

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