Investment by venture capitalists is picking up, and interactive and mobile advertising start-ups are among their favorites, says investment bank Petsky Prunier LLC. A separate report from the University of New Hampshire shows wealthy “angel” investors put smaller amounts into new companies last year.
There was a significant increase in the first quarter in investments and merger and acquisition activity in the marketing, information and digital media industries versus a year earlier, reported Petsky Prunier. There were a total of 201 transactions worth $8.8 billion in the first quarter of this year versus 183 deals valued at $2.6 billion in the same period a year ago.
The most active segment was interactive advertising, with 56 transactions worth $1.6 billion. 28% of that value came from two large deals: Apple Inc.’s $250 million acquisition of mobile advertising network Quattro Wireless and Denstu Holdings’ $200 million purchase of interactive agency Innovation Interactive. Mobile advertising was the most active subsegment, with 18 transactions valued at $590 million.
Digital media was the second most active segment with 45 transactions valued at $1.1 billion. Marketing technology registered 39 transactions worth $765 million. The most active subsegment was online targeting and optimization, which accounted for seven transactions with a value of $53 million.
General stability in the financial markets contributed to a busy first quarter for initial public offerings backed by venture capital firms, which are generally defined as companies that manage pools of funds from large investors. “With business projecting a better year in 2010 and the IPO market beginning to open up, confidence is returning to the M&A; environment and conditions are becoming more normalized,” says John Prunier, a partner at Petsky Prunier. “For at least higher-quality companies, liquidity options are more plentiful.”
The report from the University of New Hampshire’s Center for Venture Research shows total investments by angel investors decreased 8.3% in 2009 to $17.6 billion from $19.2 billion in 2008. Angel investors are wealthy individuals, and they often provide the initial capital for new companies.
Software accounted for the largest share of investments at 19%. Retail, which includes online retailers and e-commerce technology providers, accounted for 9% of angel investments, says Jeffrey Sohl, director of the UNH Center for Venture Research.
A total of 57,225 companies received angel funding in 2009, a 3.1% increase from a year earlier, while the number of active angel investors totaled 259,480, just slightly fewer than 260,500 individuals in 2008.
“While angels have not significantly decreased their investment activity, they are committing less dollars, resulting from lower valuations and a cautious approach to investing,” Sohl says.