Venture Capital Trends Biotechnology Software Industrial Energy For United States, Texas, Pennsylvania, Massachusetts, California Trends And Report Zpryme 2009

UPDATE: VENTURE CAPITAL TRENDS, 2000 TO 2007

2008

VC Investments Show an Increasing Trend Toward the Industrial/Energy Sector

Austin, TX - 04/10/08 - In 20071, California accounted for 47.7% of all VC investments, and thus it is not surprising that the U.S. investment trends in the biotechnology, software, and industrial/energy sectors appear highly correlated to California investments from 2000 to 2007. In the U.S, VC investments in biotechnology as a percent of total investments have remained fairly stable since 2003; however, in 2007 biotechnology was still the second largest investment sector in the nation. Pennsylvania and Massachusetts had the largest share of biotechnology investments among the major states that attract VC investments. Biotechnology as a % of Total VC Investments, 2000 - 2007 70.0%

In 2007 software VC investments represented 18.1% of VC investments in the U.S., which is down from its 23.3% share in 2000. The software sector still took in the largest share of VC investments in the U.S. Similarly, Massachusetts, California, Texas and Pennsylvania have all seen a decrease in their percentage of software investments since 2000. From 2004 to 2007 venture capital investments in the U.S. have shown an increasing trend towards the industrial/energy sector, increasing from 2.4% of total VC investments in 2000 to 10% of investments in 2007. Texas appears to have started the trend in 2003 whereas California, Pennsylvania, and Massachusetts started to increase their share of industrial/energy VC investments in 2004.

US

60.0%

TX

50.0%

PA

40.0%

MA

CA

30.0%

20.0% 10.0% 0.0% 2000

2001

2002

2003

2004

2005

2006

2007

Industrial/Energy as a % of Total VC Investments, 2000 - 2007 25.0% US

TX

20.0%

PA

15.0%

MA

CA

10.0% 5.0%

To conclude, this analysis brings two questions to mind about what might be driving the increase in investments in the industrial/energy sector.

0.0% 2000

2001

2002

2003

2004

2005

2006

2007

Software as a % of Total VC Investments, 2000 - 2007

1. Is the recent trend in investments in the industrial/energy sector a reaction to strong consumer demand for alternative energy and or so called “green” goods?

35.0%

US

30.0%

TX

25.0%

PA

2. Or, have VC’s been blinded by the “green exuberance,” and thus lost sight of significant investment opportunities in other sectors such as I.T. or Medical Devices and Equipment?

15.0%

MA

20.0%

CA

10.0% 5.0% 0.0% 2000

2001

2002

2003

2004

2005

2006

2007

1Venture

capital investment data gathered from PriceWaterhouseCoopers and National Venture Capital Association’s Money Tree database. For a formal definition of the sectors in this analysis please refer to the “Report Definitions” section on the Money Tree Report website.

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