New England companies also attracted more venture investments: $3.2 billion, up from $2.6 billion in 2010.
The New England showing was boosted by a strong fourth quarter, when venture investment rose from $690 million in the third quarter, to $777.4 million in the last three months of 2011. Driving that growth were investments in biotechnology companies, which surged to $386 million in the fourth quarter, up from $229 million during the previous quarter. Biotechnology firms accounted for 50 percent of all the venture money invested in New England from October through December, and seven out of the top 10 New England deals were in the sector. The largest New England funding deal during the fourth quarter, $78 million, was raised by Agios Pharmaceuticals Inc., a Cambridge company that is developing cancer drugs.
“New England had a very good year, and biotechnology really carried the day for us,’’ said Kevin Shaw, partner in PricewaterhouseCoopers’s emerging company services practice in Boston. “The combination of our teaching hospitals, universities and venture capitalists who know biotech - that adds up to a strong cluster.’’
Polaris Venture Partners, based in Waltham, led all New England VC firms in investments in the fourth quarter, with 13 deals.
Alan Crane, a Polaris general partner, said that the large amounts of money flowing into area biotechnology firms represent “a maturation of some promising companies that are now at the stage where they can attract significant dollars.’’
Crane added, however, that early stage biotechnology companies are having difficulties attracting funding.
“That’s a concern,’’ he said, “because those young companies, just emerging from university labs, are the lifeblood of the industry.’’
Nationally, the software industry maintained its status as the single largest investment sector for the year, with dollars increasing by 38 percent over 2010 to $6.7 billion in 2011. That money was invested in 1,004 deals, a 7 percent rise in volume over the prior year.
