Corporate Venture Capital Activity On Three-Year Upward Trend

Arington, VA  (Profitable.com)  Over the last three years, corporate venture capitalists (CVCs) have steadily increased investment activity, participating in 15 percent of all venture capital investment deals in 2011 according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association (NVCA) based on data by Thomson Reuters. This participation rate compares to 2010 when corporate VCs were involved in 13.6 percent of all venture capital deals and 12.7 percent of all deals in 2009. In 2011, CVCs invested $2.3 billion into 551 deals compared to $2.0 billion into 481 deals in 2010, a 15 percent increase in dollars and deals for the year.

“Corporations bring a unique and specialized perspective to venture investing and are increasingly becoming more active in supporting the growth of emerging technologies. In turn, the venture capital industry has embraced the CVCs’ depth of resources – including R&D, access to broad marketing channels and operating experience – as invaluable contributions to the success of the startup economy,” said Mark Heesen, president, National Venture Capital Association.

Driven by strong clean tech investment, CVCs put the most money into the Industrial/Energy sector where $974 million was invested in 95 deals. The MoneyTree report also showed that CVCs participated in more than one-fifth (22 percent) of the Clean Tech deals and provided nearly 15 percent of financing in the sector since the beginning of 2010. Similar to 2011 trends in traditional venture capital investment, CVCs were most active in the Software sector in 2011 where they invested $883 million in 284 deals. Biotechnology ranked second in terms of the number of deals where 172 rounds comprising $694 million were completed.

“It’s not surprising to see corporate venture capitalists becoming even more active in the Biotech sector,” noted Tracy T. Lefteroff, global managing partner of the venture capital practice at PricewaterhouseCoopers. “Larger biopharma companies have recognized that their expertise does not lie in early stage R&D – the smaller, more nimble venture-backed companies are more efficient at drug development. Accordingly, the larger biopharma companies are looking to these venture-backed companies to help fill their pipeline as many of their blockbuster drugs are coming off patent. Bringing corporate venture capitalists to the table early in the company’s development helps ensure that there will be interest in the drugs being developed and identify a potential acquirer early on, thus allowing the VCs to deliver more expedient returns to their investors.”

“The venture-backed community represents an immense source of creative ideas.  Aligning objectives through investment and integrating complementary capabilities assures that solutions can be brought forward at a scale that matters,” said Mary Kay James, DuPont Ventures and NVCA Corporate Venture Group Advisory Board Member. “Given these benefits we anticipate the total amount of CVC investment and the percentage contribution to the overall venture investment totals to continue to steadily increase in the coming year and beyond.”

MoneyTree Report results are available online at http://www.pwcmoneytree.com and http://www.nvca.org.

About the National Venture Capital Association

Venture capitalists are committed to funding America’s most innovative entrepreneurs, working closely with them to transform breakthrough ideas into emerging growth companies that drive U.S. job creation and economic growth. According to a 2011 Global Insight study, venture-backed companies accounted for 12 million jobs and $3.1 trillion in revenue in the United States in 2010. As the voice of the U.S. venture capital community, the National Venture Capital Association (NVCA) empowers its members and the entrepreneurs they fund by advocating for policies that encourage innovation and reward long-term investment. As the venture community’s preeminent trade association, NVCA serves as the definitive resource for venture capital data and unites more than 400 member firms through a full range of professional services. For more information about the NVCA, please visit http://www.nvca.org.

The PwC Private Equity & Venture Capital Practice is part of the Global Technology Industry Group, http://www.pwcglobaltech.com. The group is comprised of industry professionals who deliver a broad spectrum of services to meet the needs of fast-growth technology start-ups and agile, global giants in key industry segments: networking & computers, software & Internet, semiconductors, life sciences and private equity & venture capital. PwC is a recognized leader in each industry segment with services for technology clients in all stages of growth.

About the PwC Network

PwC firms help organizations and individuals create the value they’re looking for.  We’re a network of firms in 158 countries with close to 169,000 people who are committed to delivering quality in assurance, tax and advisory services.  Tell us what matters to you and find out more by visiting us at http://www.pwc.com.

© 2012 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see http://www.pwc.com/structure for further details.

About Thomson Reuters Thomson Reuters is a leading source of information for businesses and professionals. Through a wide range of products and services, Thomson Reuters helps clients make better decisions, be more productive and achieve superior results. Thomson Reuters has headquarters in New York and employs more than 50,000 people worldwide.