SAN JOSE, Calif. Venture capitalists invested $4.7 billion in 597 deals during the first quarter of 2010, up 12 percent from the $4.2 billion invested in 522 deals during the same period in 2009, according to Dow Jones VentureSource.
"The uptick shows the industry is moving toward a slow recovery following the economic downturn," said Jessica Canning, global research director for Dow Jones VentureSource in a prepared statement.
The Information Technology sector represented 32 percent of the deals, raising $1.5 billion in 192 deals, up 15 percent from the $1.3 billion invested in 190 deals during the same period last year. Despite the growth, the sector continues to lose ground to business and consumer services since 2005, said VentureSource.
Software continued to claim the largest slice of IT investment, raising $822 million for 122 deals, up 13 percent from the first quarter of 2009. The electronics and computer hardware sector picked up as investors put $257 million into 36 deals, an 82 percent increase from $141 million put into 17 deals during the same period last year.
In the health care sector, 62 deals in medical devices raised $439 million, a 23 percent drop in capital raised despite an increase in deals from 47 in the first quarter of last year.
The median deal size for the first quarter of 2010 was $8.8 million, up from the $5 million seen in the same period last year, according to VentureSource. Late-stage investments accounted for 38 percent of the first quarter's deals. seed- and first-rounds accounted for 35 percent.
"After a prolonged slow period for the liquidity markets, there is a backlog of later-stage companies looking to exit," said Canning. "Until investors can find a viable exit opportunity, they will focus their capital on keeping these companies alive," she added.