Feeds

The Great VC Squeeze of 2001

And who can blame them?

  • alert
  • submit to reddit

Security and trust: The backbone of doing business over the internet

Venture Capital investment tumbled 40 per cent in the first quarter of 2001, the biggest sequential drop on record.

Venture-backed companies in the US raised $10.1 billion during the first three months of the year, compared with $16.8 billion in Q4 of 2000, according to a survey by PricewaterhouseCoopers and VentureOne.

In Q1 last year, venture capital investment was almost $20 billion.

The number of financing rounds fell 34 per cent to 692. Start-up companies got stuck with a thinner slice of the pie - they netted around a quarter of the cash, compared to 30 per cent in Q4 2000.

The Q1 investment figure marked the fifth consecutive drop in venture capital cash. Virtually all IT sectors were affected during the period, including electronics and computer hardware, and semiconductors, which all saw investment fall by at least 50 per cent.

"It's important to put this quarter in perspective," said Dave Witherow, VentureOne CEO.

"There was a tremendous influx of capital between Q2 1999 and Q1 2000, and this has been followed by four quarters of decline - but the current level of investment in venture-backed companies is still about twice the amount being invested two years ago, before the Internet funding craze took off."

But VCs still have faith in dotcoms - surprising, considering the current death rate (55 more shut their doors in April). Internet companies still account for around 75 per cent of investments, the survey found, but the amount of dollars ploughed into this sector fell 43 per cent sequentially to $7.6 billion in Q1.

The only Internet companies that saw investment increase were ISPs - they grabbed $1.1 billion, due to relatively big investments in a small number of companies. ®

Related Link

VC report

Related Stories

Therapists to profit from dotcom deaths
Dotcom value drops 88% in 2000
New York VC warns of more public dotcom deaths
The first Titsups of Spring

New hybrid storage solutions

More from The Register

next story
JINGS! Microsoft Bing called Scots indyref RIGHT!
Redmond sporran metrics get one in the ten ring
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Murdoch to Europe: Inflict MORE PAIN on Google, please
'Platform for piracy' must be punished, or it'll kill us in FIVE YEARS
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
OECD lashes out at tax avoiding globocorps' location-flipping antics
You hear that, Amazon, Google, Microsoft et al?
Show us your Five-Eyes SECRETS says Privacy International
Refusal to disclose GCHQ canteen menus and prices triggers Euro Human Rights Court action
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Security and trust: The backbone of doing business over the internet
Explores the current state of website security and the contributions Symantec is making to help organizations protect critical data and build trust with customers.