Upbeat Financial Outlook ... But Not So Much for Us
Look for good economic news wherever you can find it. The quarterly report from the National Venture Capital Association and PricewaterhouseCoopers LLP offered such encouragement, if only because the Spring 2009 funding levels augur an annualized investment spigot comparable to the halcyon days of 1996 and 1997 when venture capital investment was in the $11 billion to $14 billion range. According to the NVCA/PwC "MoneyTreeTM Report," venture capitalists poured $3.7 billion into 612 deals during the second quarter of 2009 - slightly more than their investments during the year's first quarter.
But electronics, communications and digital media are not appealing to VCs at this time. While investments in life sciences (including biotech) jumped up 47%, and the "clean technology" category climbed 15% over the previous period, other high tech categories had vastly mixed appeal to VCs. Computers and Peripherals saw a VC dollar investing increase of 262%, Networking and Equipment climbed 112%, and IT services attracted 28% more VC money than in 1Q09.
On the other hand, Internet-specific companies received $524 million in 124 deals during the second quarter, a 15% drop in dollars and a 12% decrease in deals compared to 2009's first quarter. Other industry sectors that experienced investment dollar declines in 2Q09 included Semiconductors (5% decline to a 10-year low), Media and Entertainment (48% decline) and Telecommunications (13% drop), according to the MoneyTree Report.