SAN FRANCISCO — Venture capitalists invested more in U.S. startups in the second quarter than they did during the same period a year ago, suggesting that investors are ramping up their search for the next Facebook or Twitter.
In the April-June period, startup investments climbed nearly 5 percent to $7.5 billion, up from $7.2 billion in the year-ago quarter, according to a study published Wednesday. That funding went to 966 startups — down 3 percent from 998 startups that received funding in the second quarter of 2010 but up 19 percent from 814 funded in the first three months of 2011.
In Colorado, 21 deals totaling $203.8 million were financed in the second quarter.
The study is conducted each quarter by the National Venture Capital Association and PricewaterhouseCoopers, and is based on data from Thomson Reuters.
Starting last quarter, the NVCA made two changes to the way data are collected in an attempt to more accurately reflect market trends. The study now includes financing rounds to startups that have previously received funds earmarked for an acquisition, although it doesn’t count the funding round that enabled the acquisition. And it also includes corporate investments in startups that have received venture funding in the past.
As usual, most of the funding for the quarter went to companies in the expansion and later stages of development. A total of $5.1 billion was divided among 502 companies, compared with $4.7 billion among 536 companies a year earlier.
NVCA president Mark Heesen said the increase in first-round financings shows the market for IPOs and acquisitions is improving enough for venture capitalists to find new companies to fund. Still, the market has moved from what he considered a grade of “D” last year to “C” this year.
“Things are better, but it’s not a report card you run home to Mom and Dad with,” he said.
