Dow Jones study: VC funding near 2007 highs

Venture capital investments were very strong in the second quarter thanks to investments in healthcare, IT, consumer services and business services. In total, there were 754 deals and $7.7 billion invested, which is just nine percent off venture capital’s 2007 high, according to analysis of a Dow Jones report by Ernst & Young LLP.
California was the top investment region with $6.9 billion, although the Los Angeles Business Journal reported that LA’s activity ran counter to trends. Jeff Grabow, the western region venture capital leader for Ernst & Young, noted the market had some bright spots, including rising interest in consumer services startups such as online retailers and new-media companies.
In Tiffany Hsu’s Los Angeles Times article, Grabow says, “You’ve seen some very hot spaces and companies with some very good businesses that investors have an appetite to buy.” For example, online shoe retailer ShoeDazzle.com received $40 million in May from Menlo Park venture firm Andreessen Horowitz.
The Orange County Register reported Orange County also ran counter to the national trend, with a 30% drop in number of deals and 23.7% drop in dollars. But according to Kim Letch of Ernst & Young, “One of the bright notes for Orange County is that the sectors for which we have a better reputation have done well in the second quarter. Half of the (local) companies raising money are in the medical device sector and IT is the other sector. In Orange County it has its biggest quarter in the past two years.”
And according to Grabow, the overall surge in IPO activity should continue to drive the venture capital market in coming months.