I turned to Nexit Ventures for opinions on 2010 for the venture capital industry. I received both comments and a lot of good research data regarding VC investments in the US. The data is based on Fenwick’s recent survey on Q4 VC activity. In short, 2010 was a good year for venture capital. Almost all metrics were pointing higher, except for one: raising funds for venture capitalists was still difficult and was at its lowest since 2003.

We’ll dig into the data through four different areas; VC investments, M&A activity, IPOs and VC fundraising.

First off, VC investments in Q4 2010 increased 38% in dollars invested compared to Q4 2009. Overall, venture capitalists invested $7.6 billion in 735 deals while in Q3 2010 662 deals saw $5.5 billion invested. In total, 2010 saw 2799 deals with about $26.2 billion invested. Internet and digital media industries drove the increases in venture capital while life sciences and hardware lagged.

Q4 of 2010 saw 109 M&A transactionsworth $10.5 billion which is a dramatic 84% increase in dollars invested from the $5.7 billion paid in 102 acquisition in Q3 of 2010. In total, 2010 saw 445 M&A transactions worth $33.9 billion. This is a 63% increase in dollars invested from 2009.

The IPO market was also more active than in 2009. 46 venture backed IPOs were seen in the US in 2010 compared to 8 venture backed IPOs in 2009. In 2010 the companies raised $1.1 billion compared to $0.9 billion in 2009.

Venture capitalists had a hard time raising funds in 2010. Funds raised was at its lowest in the US since 2003. Fenwick states in their data that VC funds continued to invest more funds than they raised in Q4 of 2010 as they did in Q3 of 2010 – a trend that won’t be sustainable in the long run. The two possible scenarios from this will be that VCs will invest in fewer companies in the future or raise more funds to at least sustain the current rate.

Image by Paul Felardeau.
This post is part of a series of posts supported by Nexit Ventures.

Nexit Ventures is a mobile venture capital firm focused on wireless technologies and services. Leveraging its extensive network in the global mobile marketplace, Nexit invests primarily in Nordic and US-based earlystage companies with products and services for a global market. For Nordic mobile companies, Nexit provides a bridge to Silicon Valley markets and exit opportunities.