Startups had less cash to spend in ’12

NEW YORK >> A new study shows that funding for business startups declined in 2012, the first time that’s happened in three years, as venture capitalists spent less money on fewer deals.

Capital-intense sectors like clean technology and life sciences were among the hardest hit, according to the MoneyTree study released Friday. It was conducted by PriceWaterHouseCoopers and the National Venture Capital Association, based on data from Thomson Reuters.

In all of 2012, startup investments fell 10 percent to $26.52 billion from $29.46 billion. There were 3,698 deals completed, down 6 percent from 3,937 in 2011. Venture investments also declined 13 percent in the final quarter of the year, to $6.4 billion from $7.38 billion a year earlier.

“General economic uncertainty continues to hinder capital investments, and venture capitalists are no different,” said Tracy T. Lefteroff, global managing partner of the venture capital practice at PwC U.S. “As the number of new funds being raised continues to shrink, venture capitalists are being more discriminating with where they’re willing to place new bets. At the same time, they’re holding on to reserves to continue to support the companies already in their portfolio.”

FDIC shutters Minnesota bank

WASHINGTON >> Regulators have closed a small lender in Minnesota, making it the second U.S. bank failure of 2013 following 51 last year. 

The Federal Deposit Insurance Corp. on Friday seized 1st Regents Bank, based in Andover, Minn.

The bank had roughly $50.2 million in assets and $49.1 million in deposits as of Sept. 30.

First Minnesota Bank, based in Minnetonka, Minn., agreed to pay the FDIC a 2 percent premium to assume all of the deposits of the failed lender.

Fidelity closes off mutual fund

Fidelity Investments, the second-biggest mutual fund manager in the U.S., said it will close its Small Cap Discovery Fund to new investors after assets almost doubled in the past year to $3.9 billion.

The fund will accept new purchases only from existing investors or through some retirement accounts and financial advisers after Jan. 31, the Boston-based company said. Small Cap Discovery has beaten 99 percent of rivals over the past five years.

Money leaves stock funds for a sixth straight year

BOSTON >> Investors pulled money from stock mutual funds in 2012 for the sixth year in a row, despite the stock market’s strong performance. Bond funds attracted the most cash since 2009, another illustration of how conservative investors have become with their money since the financial crisis.

A net $90 billion was withdrawn from U.S. stock mutual funds last year, industry consultant Strategic Insight said. The total included $26 billion pulled out in December, the 10th month in a row that withdrawals have exceeded deposits.

The full-year total was the largest since 2008, when $136 billion was removed. Since 2007, the year that the stock market hit a historic high, nearly $405 billion has been withdrawn.

It’s been the opposite story for bond funds, which typically generate smaller long-term returns than stocks, but with less chance of short-term losses.

Bond funds attracted $317 billion in new cash in 2012, the most since a record $350 billion was added in 2009. They have taken in nearly $1.14 trillion since 2007, or nearly three times the amount pulled out of stock funds.

That’s a sharp departure from the norm. Before 2008, for every dollar in new cash that bond funds attracted, stock funds typically drew $2. It was rare for more money to flow out of stock funds than in, during a given year.

That changed after stocks plunged nearly 40 percent in 2008. Although the market has more than doubled as the nation recovered from a recession, many investors remain fearful.

TOTAL RECALL

About 560,000 of Target Corp.’s Circo and Xhilaration children’s cotton or cotton/fleece two-piece pajama sets have recalled. They were made by Makalot Garments Co. Ltd. of Taiwan and sold in infant and toddler sizes 12M, 2T, 3T, 4T and 5T, and in girls and boys sizes XS, S, M, L and XL.

There are a variety of colors and designs, including stars, dots, skulls, peace signs, cats, owls, footballs and camouflage. To see a complete list of item numbers included in this recall, visit the firm’s website.

The item number is on a tag on the shirt’s side seam and on the pants at the waist. A tag printed on the neck of the pajamas reads “Circo” or “Xhilaration,” “Wear snug-fitting not flame resistant” and the item number. They were sold from August through November 2012.

They are being recalled because the pajama sets fail to meet the federal flammability standards for children’s sleepwear, because they do not meet tight-fitting sizing requirements. That poses a burn hazard to children.

Call Target at 800-440-0680 or visit www.target.com and click on Product Recalls at the bottom of the page for more information.