Venture Capitalism

Q1 Report: VC Funding in New York Lowest in 15 Months

VCs invest early and less.
screen shot 2012 04 18 at 11 32 33 am Q1 Report: VC Funding in New York Lowest in 15 Months

via CB Insights

The data service whizzes at CB Insights released a new report today on venture capital financing in the first quarter of 2012. On first glance, the news doesn’t look great for New York. The data shows that funding in New York dropped to a five-quarter low. “But the state’s deal activity stayed strong so we don’t think the decline is a problem (yet),” says the report.

Eep, was the parenthetical really necessary? Not likely. “NY remains a hub for early stage investment with 30% of deals in the seed stage and another 30%+ in the Series A stage,” the firm added, assuaging fears.

In fact, a closer look at New York (you can access the full report for free) also shows that while the dollar volume may be down, the number of deals are up from last quarter. That’s the same trend CB Insights reports nationally. VCs invested $5.9 billion domestically last quarter, the lowest amount since Q1 2010, thanks to fewer “mega deals.” However, they also made 785 investments overall, the second highest tally in the past nine quarters. Nationally, seed investing “hit a historical high,” with one out of every five VC deals being made at the early stage.

All told, funding in New York fell 41 percent from Q4 2011, while the number of deals climbed 11 percent. The report identified rounds raised by Aereo, Buzzfeed, and Peek among the “top deals.”

The report also shows that NYC took the third spot, after San Francisco and Mountain View, for “Internet VC deals” with 47 deals totaling $153 million. In terms of mobile VC investments, New York was fourth–after San Francisco, Palo Alto, and Mountain View–with 10 deals for a total of $39.37 million.

Keep your eye on that mobile sector, urges CB Insights, predicting an “Instagram Effect.” Although the Facebook deal was announced when first quarter had closed, they say, “We expect that the coming quarters will be interesting for the mobile sector as companies and investors try even more aggressively to ride the mobile wave.”

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