Administration June 7, 2003

Venture Capital Getting Harder to Come by

July 30, 2001 (PLANSPONSOR.com) - Capital is getting harder to come by, and the number of new dollars invested in start-ups is dwindling, according to numbers from Venture Economics and the National Venture Capital Association.
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Venture capitalists invested $10.6 billion in start-ups during the second quarter of 2001, a 61% drop from the same period last year, and billions of dollars away from its peak of $28.6 billion in the third quarter of 2000, according to the figures.

The dramatic fall from the last year’s highs, when venture capitalists invested $27.2 billion in the new economy, can be attributed to the bursting of the technology speculative bubble.

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Venture capital investment in Northern California, the cradle of many startups, plunged 66% to $3.14 billion in the second quarter of 2001, from $9.28 billion during the same period last year.

Perspective

But a bust for the Internet has become a boon for biotechnology. Start-ups focused on medical sciences, health and biotechnology received $1.47 billion in venture capital the second quarter, up 37% from the $1.07 billion received last year.

Nevertheless, 2001 has still been a good year. Through the first half of the year, venture capitalists had invested $22.8 billion, more than any other entire year besides 1999 and 2000, when venture capitalists invested $58.8 billion and $103.3 respectively.

– Camilla Klein                                editors@plansponsor.com

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