Report: Philly venture capital investment dips in Q3, Silicon Valley nears normalcy

Last quarter, we celebrated the fact that Philly had the nation’s largest quarter-over-quarter increase in venture capital in the U.S. Thanks to a small number of high priced deals, we saw the local VC market jump nearly 500 percent.
So, could Philly keep the upward momentum into this quarter?
Not so much.
According to the most recent Pricewaterhouse Coopers MoneyTree report, the Philadelphia region’s VC market has seen a significant dip in third quarter investment.

The region received $94.4 million in VC investment in the third quarter, compared to $163 million last quarter, a drop of 42 percent. The region’s venture capital investment dropped 62 percent compared to the same quarter a year ago. Despite the dip in total invested dollars, the number of deals received a slight bump from 22 last quarter to 25. Only seven of the 16 metropolitan areas tracked by the report saw an increase from last quarter.
By far, the largest jump in total investment belongs to our friends in Silicon Valley. In what could be seen as a leading indicator, the Valley received nearly the same investment this quarter as it did in Q3 2008, and nearly double the investment quarter-over-quarter. The 67th Ward’s numbers stayed relatively flat in both deals and total investment, presumably anticipating the economic recession that will overtake the region after the Phillies defeat the Yankees in the World Series.
As a region, Philadelphia ranked ninth in deals made and twelfth in total-invested. The average deal in Philadelphia was $3.7 million, ranking it the fourth-lowest.
Aside from the VC apocalypse that hit the entire country in the first quarter, the current total investment in Philadelphia is the lowest since the third quarter of 2003.
[Download a copy of the report.]