Thanks in part to the resiliency of the stock market, the amount of venture capital money going into startups improved in the second quarter.
According to a new MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association, investors poured $15.3 billion into startups in Q2 2016, marking a 20.5 percent increase from a year ago when venture investments stood at $12.7 billion.
Among the industries receiving venture capital dollars, software startups commanded the highest level of funding in the second quarter, according to the report. The software industry received $8.7 billion in funding with 379 deals for the quarter. That’s up 70 percent in dollar terms, although it does mark a decline of 4 percent in terms of number of deals compared to the first quarter of this year. Of the software deals, six of 11 were mega-deals with investments of $100 million or more.
The biotechnology industry came in second, with the sector getting $1.7 billion in venture dollars during the second quarter. There were 100 deals in that three-month period, which represents a 19 percent decrease from the first quarter. The amount of money being invested did increase 14 percent, with biotechnology and medical devices leading the way. The third-largest category during the second quarter was IT services, which commanded $946 million in venture funding. There were 80 IT services-related, venture-backed investments during the time frame. Internet-specific startups also got some investors' interest, with the report finding the industry received $2.6 billion, funding 251 deals. That’s a 9 percent increase in dollar terms and a 2 percent increase in number of deals from the previous quarter.
While the amount investors are pouring into startups is increasing, the number of deals happening is decreasing, and that’s largely due to the venture capitalists being more selective in terms of the companies they choose to invest in. A handful of startups that got a lot of money during the last year crashed and burned, leaving investors wary of investing in a dud.