VCs focused on later stage

According to a new industry report, venture capitalists have spent the past six months concentrating on investing on later stage companies – particularly outside their existing portfolios.

Despite the current economic downturn worldwide, venture capital firms have continued to invest in later stage companies that are looking to expand. According to a new industry report, over the last six months more than $15bn was injected into ventures across the globe, accounting for more than half the total investment in private equity recorded for the period.

VentureWire Research, the US-based venture capital firm that published the report, emphasises that many venture capitalists looked to companies outside their portfolio to invest. The firm examined nearly 1,400 deals and found that more than 40 venture capital firms made at least six new expansion investments outside their portfolios during the period.

The list of firms that were most active includes 3i, the London-based investment group, which invested in 32 later stage companies. Intel Capital, the investment arm of chip giant Intel, which made 21 investments and JPMorgan Partners (14 investments).

Others on the list of prolific expansion capital providers are Merrill Lynch, Vertex Management, Lehman Brothers, Mitsubishi, Sun Microsystems, GE Capital and Cisco Systems. VentureWire said that although venture capital was not core to the business of many of these firms, they became more involved because more traditional investors had pulled back during the period.

The biotechnology sector was the most popular market for investors, with more than 100 expansion deals completed. Investment in IT products and services held up despite the worsening overall environment. Companies operating in the internet services, networking hardware, software, and optical networking completed more than 60 additional rounds of funding.