Last year drew to a close with a more cautious investment environment than the previous year, in spite of an exit market that remained vigorous throughout the year – see charts here.
The spectacular highlight of the bumper exit year in terms of scale was the $18.4bn initial public offering of US-based social network Facebook. This accounted for more than half the total raised from the year’s 147 exits from corporate-backed entrepreneurial companies worth $35.6bn – an increase on both metrics from the 140 exits worth $18.3bn in 2011.
Yet despite the large sums raised from exits, investment activity slowed. There were 1,014 investments worth $18bn, compared with 1,052 investments worth $25.7bn in 2011.
This slowed activity reflecteda cautious mood in relation to the macro-economy, where there was fretting towards the end of the year about the US’s so-called fiscal cliff, after financial markets gyrated throughout the year in response to the protracted debt problems of many euro-zone governments, particularly Greece, Spain and Italy.
Nonetheless corporates continued to be in the vanguard of deal-making as the year ended, with the largest December deal being a $400m round raised by China-based e-commerce company 360Buy, among whose investors is corporate-backed venture firmDST Global, and the second-largest being Taiwan-based manufacturer Foxconn investing $200m in US-based camera company GoPro.
n addition, corporate venturing unit Sanofi-Genzyme BioVentures1 and Ireland-based pharmaceutical company Shire helped Ultragenyx Pharmaceutical, a US-based genetic disorder treatment company, raise $75m.
The fourth quarter of 2012 featured 228 investments worth $3.7bn – down from the 260 investments worth $5.7bn in the same period of 2011 and the 262 invest-ments worth $4.3bn in the third quarter of 2012.
There were 61 investments last month worth $1.1bn, compared with 63 investments worth $1.4bn in November and 80 deals worth $1.5bn in December 2011.
In the fourth quarter there were 34 exits worth $6.3bn, compared with 21 exits worth $1.7bn in the third quarter and 25 exits worth $4.2bn in the fourth quarter of 2011.
Last month there were six exits worth $2.6bn, while in December 2011 there were 11 exits worth $1.7bn and in November last year there were eight exits worth $1.7bn.
Last year featured 23% of investment activity in A rounds, 16% in B rounds, 12% in C rounds, 8% in B rounds and 5% in E rounds or beyond. Stake purchases, which are often strategic tie-ups between corporates and smaller companies, accounted for 15% of activity.
The most important sectorial trend of the year was the drop in clean-tech deals, which fell from 15% of activity in 2011 to 8% in 2012, mirroring a wider difficult environment for the sector. The most active sector was IT, accounting for 20% of deals, followed by healthcare, with 18% of deals. The strong level of healthcare activity is perhaps surprising given there have been many fears this year about an impending crisis in the sector’s venture market. The next most active sectors were consumer and media, both accounting for 17% of activity.
The US contributed 66% of the year’s dealmaking, with the next most active region, the UK, accounting for less than a 10th of this dealflow – 62 investments or 6%. Germany was next most active country, with 42 deals, followed by India and China, with 37 each. These were followed by Japan with 21 deals, and Israel with 19 deals.