VC investments in US plummet 61 per cent to a 12-year low in Q1 2009
18 April 2009
US venture capital investments sank 61 per cent in the first quarter of 2009, dropping to the lowest level in 12 years as financiers became even warier about sinking funds into startups during a deepening recession.
In yet-another indication that a pullback that began last summer is not abating, venture capital investments totalled just $3 billion during the first three months of 2009, according to a report released on Saturday by Dow Jones VentureSource, a venture between PriceWaterhouseCoopers, the National Venture Capital Association and Thomson Reuters. In the year-ago quarter, investments totaled $7.74 billion. This is the lowest quarterly level of venture investments since the first quarter of 1997, when they totalled $2.96 billion.
The report said 549 companies received investments in the first quarter, down from 997 in the same period last year. This is the smallest number of companies to receive investments since the first quarter of 1995. Only 477 venture deals were completed in the quarter, well below the 706 deals done in the first quarter last year and the industry's lowest quarterly deal total since 1996.
"We're seeing continued retrenching in the venture capital industry," said Jessica Canning, director of global research for Dow Jones VentureSource. "Over the past several quarters, VCs have pulled back significantly on early stage investments in the US, across all industries. During the economic downturn, investors will continue to focus on nurturing their strongest, existing portfolio companies, and keep their eyes open for the next set of opportunities.''
Almost every industry saw a decline in venture investments. The software industry received the most funding, with $614 million spread out among 138 companies, down almost 56 per cent by dollars and 45 per cent by deals compared with last year.
One of the few industries to report year-over-year growth was health care services, where investments edged up 6 percent to $46.7 million. Eleven companies received investments - one more than in the same quarter of 2007.
