VC funding drops more than 20% to USD5.9bn in Q1

VC funding fell 21.3% year on year to USD5.9bn in Q1, the lowest level since Q3 2010, according to new stats from CB Insights. The figure is some way below the USD7.5bn ploughed into startups at the beginning of 2011, and is also a 22% drop on the USD7.6bn invested during Q4 2010. However, the number of deals hit 785, the highest total in two years, and up by 47 on Q1 2011, with the lack of blockbuster deals keeping the overall value of the deals down. In addition, seed funding, defined by CB Insights as investments lower than USD1.5m, hit a record level, accounting for approximately a fifth of total investments. Internet funding rounds accounted for USD2.06bn of the total from 236 deals during the quarter, while mobile and telecoms contributed USD435m from 93 investments. However, CB Insights CEO Anand Sanwal believes that investment in mobile is set to grow in the coming quarters after Facebook’s USD1bn Instagram acquisition pushed the sector into the limelight.