Venture Capital Investments Growing, But There are Fewer of Them: Signs of a Bubble?

Venture capitalists invested $5.87 billion in 736 U.S.-based companies during the first quarter of 2011, according to a new MoneyTree Report released by PricewaterhouseCoopers, the National Venture Capital Association and Thomson Reuters. That translates into $7.98 million per deal, which is 18% larger than the average deal size during the prior quarter.

This is also is 21.6% higher than the average deal size in Q1 2010, and 47% larger than the average deal size in Q1 2009.

The rising deal sizes “indicate that VCs are trying to pump more and more cash into companies than they were in recent years past. And that means they expect larger cash-on-cash returns,” according to a Fortune article.

“Overall, software companies continued to lead all industry sectors with $1.1 billion raised for 187 companies last quarter. This was followed by industrial/energy with $1.03 billion for 75 companies and biotech with $784 million for 85 companies.”

“Per usual, Silicon Valley led the nation with $2.49 billion invested in 212 companies. New England placed second with $639 million for 90 companies, and New York Metro snared $580 million for 69 companies.”