US venture capital investment continues decline

The latest US venture capital investment figures highlight a sector still in the doldrums, down almost 50 per cent on Q2 2001 and 15 per cent down on the first quarter.

US venture capital investment for the second quarter has fallen to $5.1bn, a 15 per cent fall on the $6.2bn raised in the first quarter. The figures also highlight a near 50 per cent fall against the amount raised in the same period for 2001.

A total of 443 firms received venture capital investment during the period, attracting an average of $11.5m. The average was slightly up on the previous quarter, although the number of companies receiving investment fell by over 25 per cent.

Biotechnology companies remained popular with investors in the three months to June 30, raising $984m in 62 financings. Software and internet companies raised $1.2bn across 127 deals in the second quarter, with medical devices (33 deals, $339m) and wireless networking (32 deals, $346m) also proving robust in a depressed market.

The results published by VentureWire also highlight a small increase in the number of early-stage investments, which now stands at 25 per cent of all VC investments, against 23 per cent in the first quarter.

Intel Capital, the investment arm of the semiconductor giant, was the most active investor in the second quarter, participating in 22 new and follow-on investments. JP Morgan Partners followed with 17 and Menlo Ventures was the most active traditional venture firm with 14 deals. New Enterprise Associates and St. Paul Venture Capital filled out the top five with twelve investments a piece.

VentureWire’s John Fuller said he thought an improvement in the market was unlikely in the short term. 'Heading into the summer months, it's unlikely we'll see any increase in investment levels. Several sectors continue to show promise, but a wide-spread recovery has yet to take hold.'