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.
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.
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.