Venture Capital For Internet Companies Declines
By Anna Johnson on October 20th, 2008According to the MoneyTree Report released by PricewaterhouseCoopers and the National Venture Capital Association last week, United States venture capital funding declined 7 percent between the second and third quarters of 2008.
U.S. venture capitalists invested $7.7 billion in 1,033 deals in the last quarter, with 14 percent more funding going to clean energy companies, 10 percent more going to biotech and medical device companies, and 36 percent LESS going to Internet companies, compared with second quarter funding.
According to analysts behind the report, the numbers do NOT reflect the economic crisis. Apparently this has not yet manifested itself in lower VC funding. The third quarter of the year is generally slower for venture investing, and the reason why web companies attracted less funding is because
they generally require less investment, being relatively capital efficient.
However, there are ominous signs that startups will start to feel the pinch. The number of startups getting investment for the first time dropped by 20 percent to 259 in the last quarter – the lowest level since the first quarter of 2004.
