VC Investments Plunge 23.5% in Third Quarter

October 25, 2002 ( - Those who hoped that the venture capital markets had already bottomed out now have disappointing news that VC investments into private start ups were in a free fall in the third quarter to the lowest level in four years.

The San Jose Mercury News reported that venture capitalists invested $3.9 billion nationally during the quarter, a 23.5% decline from the $5.1 billion invested in the second quarter, according to a report by Ernst & Young and VentureOne.

Leading the decline, according to the Mercury News report, was the health care sector, which declined a hefty 46%. Some investors had hoped health care projects might some day represent the same golden opportunities as technology once did, the Mercury News said.

Venture capitalists invested $947 million in health care nationally, down from $1.8 billion the quarter before. The health care segment includes biopharmaceuticals and medical devices.

Third quarter investments in technology start-ups appeared to stabilize, declining a relatively modest 1.7% to $2.5 billion, the Mercury News story said.