Bubblicious? Global VC deal sizes keep rising

Posted by Dan Primack

May 3, 2011 11:03 am

Last month, I argued that U.S. venture capital data was showing evidence of an investment bubble. More money going into fewer companies, which means that VCs are expecting higher cash-on-cash returns. Concentrating rather than diversifying.

Now we have new numbers showing that this is a global phenomenon.

Dow Jones VentureSource today said that VCs invested $9.8 billion into 967 deals last quarter for companies based on the U.S., Europe, Canada, mainland China and India. That's a 20% increase in dollars but a 7% decline in funded companies from the first quarter of 2010.

The largest differential occurred in Europe, with a 17% increase in investment but a 35% drop in the number of deals (a record low). In fact, the 182 companies funded represents the lowest such figure since VentureSource began keeping track in 2000.

Mainland China experienced drops in both dollars and companies, but average deal size still rose. Moreover, median deal size hit a record high of $15 million (20% bump from Q1 2010).

As for median investment sizes in other regions, VentureSource reports a major increase in Canada, mild accelerations in the U.S. and Europe and decreases for both India and Israel.

And, remember, this is all supposed to be in an age of lean startups that can globalize on the cheap...

Overall, 66% of all global VC dollars went to U.S. companies. Europe placed second with 16%, while China followed closely with 15%.

Tags: Venture Capital