In the first 10 months there were nearly 900 corporate venturing (CV) deals, including 116 flotations and other exits, worldwide, according to Global Corporate Venturing.
Of the 899 so far this year, 589 were announced deals with disclosed rounds worth an aggregate $34.1bn, including $12bn of disclosed exit valuations, as tracked by Global Corporate Venturing.
The biggest disclosed rounds were primarily for companies ahead of their flotation on a stock exchange (see table). The top 10 includes social network Facebook – expected to be valued at about $100bn at its initial public offering next year – discount coupon provider Groupon, which raised $950m before deciding to list after the summer, and clean-tech company Brightsource Energy that has filed to list.
Although the top 10 by round size were primarily for later-stage deals, CV units backed almost as many seed and A round companies (135) as they did in series B (131) and C (112), which is often regarded as more appropriate for parent companies because at this stage of development start-ups have usually moved beyond an idea to the point of having a product for sale. A caveat is at least 270 deals had no disclosed round.
The majority of the top 10 deals were for US companies. The US was the most active CV market, followed by China, the UK, India and Germany. The US had 599 deals in the first 10 months, according to Global Corporate Venturing, and more than the 419 calculated by US trade body the National Venture Capital Association (NVCA) under different criteria for the first three quarters of the year.
Using the NVCA figure, this amounted to about 15% of the 1,769 venture capital deals in the US in this period and an increase from the 344 struck in the first nine months of last year.
The NVCA said more than $1.7bn was directly invested by CV units in US deals in the first nine months of 2011, less than 10% of the $20bn invested by all firms in venture capital deals.
Although technology innovations were often at the heart of entrepreneurial businesses across all sectors, the information technology sector was the most active, followed by healthcare, clean-tech and media.
In US clean-tech, CV units effectively punched above their relative weight.
The NVCA, using data from Thomson Reuters as part of the PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report, said CV units made up 14.7% of the 802 completed clean-tech deals it tracked in the first nine months. By amount, deals in this sector involving CV units made up 15% – just more than $1bn – of the $7.2bn invested.
And with record CV fundraising this year (see fundraising analysis), the estimated $12bn in committed capital is expected to lead to further increases in dealmaking across all areas in the next few years, dependent on relatively stable economic conditions.
In the final quarter, the International Monetary Fund lowered its projected global economic growth rate to 4% for this year and expects similar rates next year, albeit with emerging markets growing more than three times faster than developed economies.
However, valuations for venture capital deals in the California’s Silicon Valley have been rising over the nine months to the end of September, according to law firm Fenwick & West. During the third quarter of 2011, up rounds exceeded down rounds 70% to 15%, with 15% flat, the lawyers said.
But US venture capital has continued to outperform other regions, bettering European peers for almost every time period over the past 20 years, according to data provider Thomson Reuters.