NEW YORK (AP) – A new study shows that funding for
business startups declined in 2012, the first time that's happened in three
years, as venture capitalists spent less money on fewer deals.
Capital-intense sectors like clean technology
and life sciences were among the hardest hit, according to the MoneyTree study
released Friday. It was conducted by PriceWaterHouseCoopers and the National
Venture Capital Association, based on data from Thomson Reuters.
In all of 2012 startup investments fell 10
percent to $26.52 billion from $29.46 billion. There were 3,698 deals
completed, down 6 percent from 3,937 in 2011. Venture investments also declined
13 percent in the final quarter of the year, to $6.4 billion from $7.38 billion
a year earlier, though the number of deals was the same in both quarters at
In Florida, the drop was much steeper. In
2012, investments fell 41 percent to $202.9 million, compared to $346.3 million
in 2011. There were 34 deals in Florida in 2012, compared to 55 in 2011.
“General economic uncertainty continues to
hinder capital investments, and venture capitalists are no different,” said
Tracy T. Lefteroff, global managing partner of the venture capital practice at
PwC U.S. “As the number of new funds being raised continues to shrink, venture
capitalists are being more discriminating with where they're willing to place
new bets. At the same time, they're holding on to reserves to continue to
support the companies already in their portfolio.”
By industry, software remained the largest
investment sector last year, the report found, with $8.27 billion invested into
1,266 deals. That's up from $7.51 billion invested in 1,176 deals in 2011.
San Francisco's SquareTrade Inc., which
provides electronics warranties, landed the biggest round of funding in 2012 –
$238 million from Bain Capital. Mobile payments startup Square Inc. was in
second place with $200 million secured from Citi Ventures and others.