Investors Pump $5 Billion into VC in Q4

January 27, 2004 ( - Inflows into venture capital investments totaled $4.9 billion in the fourth quarter of 2003, again riding the wave of funds flowing into biotechnology companies.

Fourth quarters’ figure is an improvement over the $4.4 billion in the third quarter of 2003 (See  Venture Capitalists Invest $4.2 billion in Third Quarter ), and is the highest amount invested since the second quarter of 2002 when the total reached $6 billion.   For the second consecutive quarter, biotech startups attracted the most venture capital – $1.1 billion during the final three months of 2003, according to the MoneyTree Survey by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.

The second leading category in the fourth quarter was software, which accounted for $978 million in the quarter.

For full year 2003, investments totaled $18.2 billion in 2,715 companies. The 15% decline from 2002’s $21.4 billion(See   Slim Pickings For VCs in 2002)was small compared to decreases over the last three years, a movement the PwC/TVE/NVCA MoneyTree survey says indicates that venture capital is settling out at a comfortable sustainable level.

Like the fourth quarter, 2003 was full of promise for biotech companies.   Venture capital investments in biotech and medical devices startups, collectively life science companies, for all of 2003 totaled $4.9 billion, accounting for 27% of the industry’s volume — the highest percentage in 12 years.

However, 2003 belonged yet again to software, the largest single-industry category, capturing $3.6 billion over the full year.   Biotechnology firms at $3.4 billion, telecommunications at $2 billion, networking at $1.7 billion or 9% of the total in 2003 and semiconductors at $1.2 billion, were behind software for the year.

The remaining industry categories accounted for less than 5% of the total yearly pool.