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In the March 7, 1997 Issue:

SURVEYS FIND VENTURE CAPITAL FINANCING INCREASED IN 1996


Two recent reports indicate the amount of venture capital financing increased in 1996, although the two reports differ on the amount of financing and the most active investors. Both surveys agreed that California and Massachusetts were the lead states in attracting venture capital.


PRICE WATERHOUSE STUDY


Price Waterhouse, in conjunction with the National Venture Capital Association, recently published the results of the 1996 National Venture Capital Survey. Venture capitalists reported investing $9.5 billion in 1996, a 25% increase over 1995.

Approximately 2,000 companies received venture backing with funds going to companies in all stages of growth, from start-up to turnaround. More than one-quarter of all companies received early stage financing: either initial/seed or first round. Follow-on investments accounted for 15% of companies and 10% of funds.

Price Waterhouse, which reports its information by region rather than by state, reported Silicon Valley remained the leader of venture capital with 552 companies attracting $2.29 billion. New England retained the number two position with 330 companies garnering $1.27 billion. The Southeast received $1.08 billion, followed by the Midwest with $895.8 million, Texas with $668.8 million, and the New York Metro area with $662.5 million.

The industry sectors receiving the most venture capital in 1996, according to Price Waterhouse were:

Industry Sector (Millions of $) Percentage
Software & Information 2,227.7 23.9%
Communications 1,827.9 19.2%
Consumer 861.8 9.1%
Healthcare 784.6 8.2%
Industrial 728.2 7.6%
Biotechnology 654.0 6.9%
Distribution/Retailing 559.6 5.9%
Business Services 473.5 5.0%
Computers & Peripherals 379.6 4.0%




COOPERS & LYBRAND SURVEY


In its annual Money Tree Survey of venture firms, Coopers & Lybrand, which also tracks venture capital activity, reported greater growth in 1996 than Price Waterhouse did. According to this survey, venture capital investment reached $10.1 billion in 1996. Surveyed venture firms participated in 2,163 deals during 1996. The average size of each financing rose in 1996 to $4.7 million, up from the $4.3 million average investment reported in 1995.

Coopers & Lybrand, which reported information only for the top 12 states, ranked the states in the following order:

State (millions of $)
California 3,211.3
Massachusetts 1,067.4
Texas 595.3
Colorado 392.7
Florida 375.9
Illinois 343.9
Connecticut 314.7
Pennsylvania 307.0
Washington 294.7
Virginia 275.7
New Jersey 264.3
Tennessee 261.5



From an industry standpoint, technology- based companies received approximately 60 percent of total venture capital investment in 1996. The industry sectors with percentage of total investments were:

Industry Sector Percentage
Communications 16%
Software 16%
Healthcare 11%
Medical devices 7%
Electronics 7%
Biotechnology 6%
Retail 6%
Consumer products 5%
Radio/TV 3%
Multimedia 2%
Other 21%



The surveys also indicate the most active venture capital firms in 1996.

For more information on the Price Waterhouse survey, call Don McGovern at 203/358-0001 or visit their Web site at http://www.pw.com/vc/ For more information on the Coopers & Lybrand survey, call 617/478-3457 or visit their Web site at http://www.colybrand.com/industry/ vcwwwq4.html#chart2


RHODE ISLAND PLAN CALLS FOR ACTION

The Rhode Island Economic Policy Council has concluded a year-long examination of the state's economy with a call for nine recommendations to be implemented.

The Council found,"Our economy has performed poorly in this decade. We have lost population every year because large numbers of people have moved out of state in search of economic opportunity. Five years into a nationwide economic recovery, key economic indicators in Rhode Island...are all still below their peak from the late 1980s."

To strengthen the state's economy, the Council suggests that several steps be taken, including:

The Economic Policy Council is a non-profit corporation equally funded by 24 Rhode Island companies and the State of Rhode Island. It is co-chaired by Governor Lincoln Almond and Lawrence Fish, chairman, president and CEO of Citizens Financial Group.

Copies of the report can be obtained by calling the Rhode Island Economic Policy Council at 401/521-3120.


ENTREPRENEUR OF THE YEAR NOMINATIONS ACCEPTED


Nominations are being accepted through April 4 for the annual Entrepreneur Of The Year awards. Nominees must be owners/managers primarily responsible for the recent performance of a company that is at least two years old. Founders of public companies are also eligible provided the founder is still active in upper management.

Regional award recipients will be selected in several award categories by independent judging panels and presentations will be made at 46 regional award banquets in June. A national judging panel will choose finalists and award recipients for five National awards and The Entrepreneur Of The Year award. All regional award recipients are eligible, including those from previous years.

The awards are sponsored nationally by the Entrepreneur Of The Year Institute, Ernst & Young LLP, the Center for Entrepreneurial Leadership Inc. at the Ewing Marion Kauffman Foundation, USA TODAY, and the Nasdaq Stock Market. For more information, call 1-800-755-AWARD (2927).

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