Where venture capitalists are putting their money

Total venture capital spending in the United States rose 12 percent to 7.8 billion in the third quarter, according to the latest MoneyTree report. Here's where the money went.

Total venture capital spending in the United States rose 12 percent to 7.8 billion in the third quarter compared to $7 billion in the previous quarter, according to the latest MoneyTree report by PricewaterhouseCoopers and the National Venture Capital Association.

The report, which is based on data from Thomson Reuters, documents 1,005 deals in the third quarter, 5 percent more deals than the previous quarter.

So far, 2013 is trending above money and deal totals of last year. But it's still below totals for the first three quarters in 2011, and pre-recession years.

Where VC dollars went

The software industry received the highest level of funding in the third quarter, surpassing the $3 billion-mark for the first time in 12 years. Nine of the 11 largest investments in the third quarter went into software companies.

The sector received $3.6 billion in venture funding in the third quarter through 420 deals—a 23 percent increase from the 342 rounds completed in the second quarter.

Biotech was a distant second, according to the report. The sector received $852 million through 123 deals in the third quarter, a 39 percent decrease in total funding from the prior quarter.

The medical device industry received the third largest investment total in the third quarter with $566 million going into 65 deals, a 12 percent increase in dollars from the prior quarter.

Other VC funding highlights from the third quarter:

  • Venture capitalists invested $1.5 billion into 252 Internet-specific companies
  • Cleantech, which is comprised of alternative energy, pollution and recycling, power supplies and conservation, raised $297 million—20 percent fewer dollars that the previous quarter.
  • The third quarter marks the seventh consecutive quarter of declining investment in the cleantech sector.

Photo: Flickr user 401(K) 2012

This post was originally published on Smartplanet.com