US venture capital investment has fallen to its lowest levels since the first quarter of 1999, according to figures published by US publisher VentureWire. The figures show a year on year fall of 60 per cent, with total VC investment for Q1 2002 standing at $5bn compared to $12.9bn a year ago.
Over three quarters of the money raised in this quarter was for expansion stage deals with the remaining 20 per cent of the financings last quarter going to early-stage companies.
The biotechnology sector managed to maintain the interest of investors, attracting $754m across 53 deals in the first quarter. The largest tranche of financing went to networking hardware, including optical networking, which raised $1.3bn in 62 deals. The total number of deals for the first quarter stood at 445, compared with 908 for Q1 2001.
'It's still too early to determine if the venture capital industry has reached the end of the long decline in investing since the bubble burst in mid-2000,' according to Ken Andersen of VentureWire. 'Though overall investment numbers will likely be down in 2002, if the industry reaches a stable investment level it can maintain, it will be a positive step for investors and entrepreneurs.'