VC Series A Investments in Web Tech Grew Strongly In May

Written by Bernard Lunn / June 12, 2009 7:00 AM / 0 Comments

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We have been tracking Series A deals in Web technology since the market mayhem in October 2008. Last month, we started researching this with our new partner, ChubbyBrain, which tracks this kind of data full-time. Launched in February 2009, ChubbyBrain is a New York City-based information services provider that democratizes startup and investor information. Early-stage investing is so important for the innovation economy, and the data we were seeing was either incomplete, only available quarterly, or presented with a negative slant. That is why we are presenting this data every month.

Healthy Month-to-Month Trend

Here are the month-to-month growth numbers, with growth percentages in parentheses:

January: $30.3 million
February: $45.5 million ($15.2 million, 33%)
March: $55.7 million ($10.2 million, 18%)
April: $73.7 million ($18.0 million, 24%)
May: $178.2 million ($104.5 million, 59%)

Wow! Not only is that healthy, it looks like boom times are back.

Okay, hold on. As always, the details matter. In this case, we have one outlier deal: the $75 million invested in Fotolia by TA Associates. This is hardly a startup. But it is the first external institutional investor round, what is called "first-sequence financing" by the National Venture Capital Association (NVCA). So, technically it fits here, and that is how other researchers who track VC financing would categorize the deal. We call this growth equity, and we recently interviewed an investor who specializes in it. It is a very valuable part of the financing eco-system. But if you want a more purist early-stage view, cut it out. If you cut that deal out, the May numbers are "only" $103.2 million, or 29% month-over-month growth. To put it differently, April and May are already more than all of Q1. So, when we get the June numbers, we can be pretty certain that Q2 will be a lot better than Q1.

Cautionary note: we may be seeing growth because our research is now more comprehensive. In the past, the industry relied on surveys completed by VCs via the NVCA. ChubbyBrain uses multiple methods to track this data. They certainly miss some (and we'd like to hear about those in the comments here) but are probably catching more than others did using older methods. So the good news may not be as dramatic as it seems. But it still looks pretty promising.

Regional View

You California dudes can just relax and get back in the hot tub with a Chardonnay. California still rules just fine with 15 out of 31 deals, giving it a 48% win, just shy of the crushing 50% mark. New York edged out Boston (take that, Beantown!) with 5 deals to 3. The rest of the country divided up a 26% slice of the pie with 8 deals.

Market Sector View

Categorization is always contentious, but here are the categories we saw (each with one deal, unless noted in parentheses):

Advertising and marketing (3)
Analytics and performance measurement
Communications (2)
Computer storage and peripherals
Data storage
eCommerce
Finance
Gaming
Health and wellness
Help desk
Information provider
Mobile (3)
Monitoring and security
Multimedia, graphics, and gaming software
News and discussion (2)
Retail e-commerce (3)
Social Web (4)
Travel
Undisclosed (stealth) (1)

Which Ventures Received Money?

This list includes only companies that (1) are US-based, (2) are in Web technology, (3) closed Series A deals, and (4) reported the amount. If we missed any, please tell us in the comments.

Which VCs Wired Money?

If multiple investors funded a single company, they'll appear on the same line below. We've listed investors twice if they did more than one deal in May.

ABS Capital Partners
Baseline Ventures, Founders Fund, Betaworks, David Shen Ventures, Accelerator Group
Bessemer Venture Partners
Blumberg Capital, First Round Capital, Genacast Ventures
Charles River Ventures
Charles River Ventures, Shasta Ventures
Draper Fisher Jurvetson, Benchmark Capital
Founders Fund
FoundersFund, Garrett Capital, Tim Ferriss
Foundry Group
Foundry Group, Draper Fisher Jurvetson Gotham, Bobby Yazdani, unknown investors
Foundry Group, Vulcan Capital, unknown investors
GADS Option Fund
Geoff Entress, Best Buy Capital
Greycroft Partners
Harold Ickes, Alexander Gage
Insight Venture Partners
Kepha Partners, Sigma Partners
LaunchBox Digital
Peninsula Ventures, Allegis Capital, Tomvest Ventures
Redpoint Ventures, August Capital
Ross Siegelman, Bob Zipp, Josh Hannah
RSG Capital
Shasta Ventures, Bay Partners, First Round Capital, Harrison Metal
TA Associates
True Ventures
Union Square Ventures, Naval Ravikant, Joshua Schachter
Venrock

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