Oct. 17, 2004--A sharp dip in venture capital funding market of the New England area might seem like a spooky omen for the fall market, but the experts don't seem to be scared.
According to a study released by Growth Advisors, a New England-based strategy consultant for venture-backed tech companies, the third quarter of 2004 showed a 51% decrease in total funding for that area. The report specified the amount of total investment dollars in the months of July, August and September dipped from $808 million in the second quarter to only $395 million in the third quarter.
Though this may appear to be bad news, New England VC specialists point out that this is the first decline of the year for this market, the second largest in the country behind Silicon Valley, even though the entire U.S. market has seen drop-offs in successive quarters.
"I wouldn't make too much of it," said Steve Goldstein, senior partner at Growth Advisors and author of the report. "It's just a snapshot of a much bigger picture, this dip is just us catching up with the market."
Though he concedes the drop off does warrant minimal concern, in general the entire New England market is predicted to increase by more than 25% compared to last year's.
"We're currently at $1.9 billion, and we're predicting to hit around $2.5 billion. Last year we finished around $2 billion," Goldstein added.
Smaller companies involved in the New England VC market echo Goldstein's sentiment and add that the drop off could be caused by something external to the market.
"We haven't seen any significant drops this quarter," said Scott Almeida, chief financial officer at the Venture Capitol Fund of New England. "I'm sure a lot of people take vacations this time of year."
Regardless of the reason for the one-quarter decline, Goldstein is confident the market in New England should finish on a high note and mark the highest year in overall funding dollars since 2001.
"This year has been a great year, and this decline shouldn't take away from that."
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