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01.29.10 Venture Investing Set For Rebound  By Mike SachoffVenture capitalists invested $17.7 billion in 2,795 deals in 2009, marking the lowest level of dollar investment since 1997, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association (NVCA), based on date from Thomson Reuters. Venture investments in 2009 represented a 37 percent decrease in dollars and a 30 percent decrease in deal volume from 2008. It was the second consecutive year of annual deal and dollar declines. Investments in the fourth quarter of 2009 totaled $5 billion in 794 deals, a 2 percent decline in dollars but a 15 percent increase in deals from the third quarter of 2009 when $5.1 billion went into 689 deals. "The venture capital industry had no choice but to slow the investment pace in 2009," said Mark Heesen, president of the NVCA. "The weak exit environment resulting from an unstable public market combined with a challenged limited partner base sent a strong message to the venture community to pull back the reins -- and the VC's listened.
"Now that the economy has begun to show signs of improvement, we expect to see dollars flow more freely back into those sectors that offered the most promise before the recession began -- clean technology, life sciences and IT. The seed and early stage pipeline needs replenishing across all industries and the health of the start-up community in the next decade will be dependent upon more robust first-time financings. Twenty-ten should be the year to begin that process in earnest." Internet-specific investment increased 20 percent in deals and 14 percent in dollars with $908 million going into 187 deals compared to $795 million going into 156 deals in the third quarter of 2009. "Internet-specific" is an individual classification assigned to a company whose business model is dependent on the Internet, regardless of the company's primary industry category. These companies accounted for 17 percent of all venture capital dollars in 2009, about the same percentage as in 2008. About the Author: Mike is a staff writer for WebProNews. Visit WebProNews for the latest ebusiness news. |
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