VC Investment Grows in Q1

SAN FRANCISCO and NEW YORK -- Venture capital investment into U.S. headquartered companies climbed 8% in the first quarter of 2007 compared to the same period last year to reach $6.96 billion, according to the Quarterly Venture Capital Report released today by Dow Jones VentureOne and Ernst & Young LLP. The report showed that deal count reached 584 deals for the quarter, down by 31 deals from the first quarter of 2006.

Coming off a five-year high for both deals and investment in 2006, the report indicated that momentum for the venture capital market is continuing in 2007. The notable trends in the first quarter include a significant level of early-stage activity with investors financing proportionally more seed- and first-round deals and dramatically increasing investing in life sciences. In fact, the $2.88 billion invested in healthcare companies in the first quarter was the highest investment level on record.

Q1 was a strong quarter for venture investment across the board. A reasonably good exit climate for venture-backed companies, via both initial public offerings and mergers and acquisitions, has opened the door for more companies to secure venture capital financing,” said Joseph Muscat, Americas Director of the Ernst & Young Venture Capital Advisory Group “The record level of investment in healthcare, driven significantly by activity in the biopharmaceuticals sector and a strong exit environment for these companies, is a major driver of venture activity.”

VentureOne

Ernst & Young International