VC investment fell in third quarter

Following two quarters of growth, venture capital funding in the life science sector fell 18 percent during the third quarter of 2011, according to PricewaterhouseCoopers report.

According to the report, venture capitalists invested $1.8 billion in 170 life sciences deal – which includes biotechnology and medical device industries. It’s the lowest number of deals since the first quarter of 2009. Investment in the life sciences sector increased 22 percent year over year, but dollars invested declined 18 percent, according to the report, from the previous quarter.

“VCs are saying that challenges in the regulatory environment for life science companies are prompting them to look to other industries to put their money to work for a faster return on their investment,” said Tracy Lefteroff, global managing partner of the venture capital practice at PWC. “When investors see a lack of exits for their companies, it depresses their appetite for funding on the front end. The nearly shut IPO window and volatility in the equity market during the third quarter contributed to the slowdown in life sciences venture funding.”

For all sectors, venture capitalists invested $7 billion in 876 deals in the third quarter, a 31 percent increase in dollars and a 3 percent increase in deals year-over-year. Compared with the previous quarter, dollars investment fell 12 percent, and the number of deals declined 14 percent.

A full copy of the report is available at the PWC website.