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The National Venture Capital Association (NVCA) has released venture investment data that calls into question the rebound suggested by numbers reported last week by Dow Jones VentureSource.
Numbers reported this morning by the NVCA and PricewaterhouseCoopers LLP were considerably less optimistic, showing $3.7 million invested over 612 deals. While Dow Jones analysts predicted a “rebound” in the venture investing sector, the NVCA says figures for the full year will most likely reflect a setback to 1996 and 1997 levels of $11 billion to $14 billion.
NVCA president Mark Heesen said in a prepared statement that the numbers do show “more positive signs than at the beginning of the year.” However, he said, a recovery isn’t expected until venture fundraising and exit activity make notable improvements.
On Saturday, VentureSource reported a $5.3 billion number for Q2 investments, encompassing 595 deals. That was a 31.7 percent increase over Q1 2009 – the largest increase in five years for the second quarter over the first, and the first time in a year that numbers had increased from quarter to quarter.
By contrast, the NVCA numbers showed only a 15 percent increase in dollars, and the number of deals were essentially flat from Q1, when the agency reported $3.2 billion invested in 603 deals.
NVCA spokeswoman Emily Mendell said the discrepancies result from different methods used by the two organizations. When a company receives part of a funding round — called a tranche — the NVCA counts only cash in hand, while Dow Jones counts the entire denomination of the commitment, she said. On the corporate investing side, the NVCA only counts venture financings from discreet venture arms of corporations, not direct corporate investments, Mendell said.
However, a Dow Jones spokesman said the company only counts cash in hand. He said Dow Jones also gets a lower deal count by not counting each tranche as an individual deal.
Earlier this month, the NVCA reported 25 funds raised $1.7 billion in the second quarter of 2009 — the smallest number of venture funds raising money in a single quarter since the Q3 1996 and the lowest level of dollars committed since Q1 2003.
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