Login or signup
36

Venture Capital Flow Slows in Third Quarter
 

Advertisement

Oct. 26, 2004--Venture capital investment in the typically slow third quarter dropped slightly compared to a year ago, according to a new report.

The third quarter produced 467 venture capital deals in the U.S. with a net investment value of $4.56 billion, according to the Quarterly Venture Capital Report released Monday by Ernst & Young, a financial services consulting company, and VentureOne, a venture capital research firm. Both the quantity of deals and the total amount invested slipped 4% from 2003.

The report stated that seed and first-round deals constituted 32% of all venture capital deals this quarter, compared to only 28% a year ago, while the $965.8 million invested in those deals represented an increase of nearly one-third over the amount invested a year ago.

"Typically these early stage companies represent small businesses," said Matt Garlick, a research analyst at VentureOne, "so I think the growth there is a healthy sign."

The biopharmaceutical segment of the healthcare industry reported 61 deals totaling $966.9 million, up 25% in quantity and 16% in value compared with last quarter. For the venture-capital market as a whole, health-care deals made up 25% of the quarterly deal-flow, the industry's highest percentage this year. Health care also received 32% of the total venture capital amount invested.

"Should we continue to see a strong demand in the IPO and mergers and acquisitions areas, I would expect to see continued strong performances from the biopharmaceutical field," Garlick said.

The median amount invested in early-stage information-technology companies rose to $5.7 million in first-round deals, the highest first-round median since the fourth quarter of 2002. Overall, investment in information-technology companies declined slightly but still represented the lion's share of venture capital activity, with 272 deals and $2.5 billion invested this quarter.

The report is based on surveys of professional venture capital firms as well as interviews with company financial officers and data from other sources.





Register on Inc.com today to get full access to:
All articles  |  Magazine archives | Comment and share features
EMAIL
PASSWORD
EMAIL
FIRST NAME
LAST NAME
EMAIL
PASSWORD

Or sign up using: