Useful Stats: 3rd Quarter VC Data by State

Two independent surveys of venture capital investments made during the third quarter of FY 2002 suggest the downward trends in the flow of money and number of VC placements will continue.

MoneyTree™ Survey

Venture capital continued its downward trend in the third quarter of 2002 with total investments of $4.5 billion into entrepreneurial companies, a decrease of 26 percent from the prior quarter, according to the PricewaterhouseCoopers/Venture Economics/National Venture Capital Association MoneyTree™ Survey. Venture capitalists invested $6 billion in the second quarter and $6.4 billion in the first quarter. The last time quarterly venture capital investments were below $5 billion was the first quarter of 1998, when it totaled $4.2 billion.

A total of 647 companies received funding in the third quarter of 2002, compared to 838 in the prior quarter. All major industries experienced declines, however. Software showed some resilience in dropping only 10 percent to $993 million and 180 deals, accounting for 22 percent of all venture capital, but telecommunications, the second largest industry category, fell 32 percent to $555 million in 67 companies. The Networking category also saw a comparable decline of 34 percent to $341 million in 39 deals.

After a string of solid quarterly investing, the Life Sciences industries finally faltered. Biotechnology declined 52 percent to $468 million and 48 companies. Medical Devices fell 28 percent to $448 million.

The 2002 MoneyTree™ survey results are available at: http://www.pwcmoneytree.com, http://www.nvca.org, and http://www.ventureeconomics.com.

In the latest quarter, there were 16 states where the MoneyTree™ survey reported no investments. SSTI has prepared a table <http://www.ssti.org/Digest/Tables/112202t.htm> to present the results by state. Data for the number of deals, total amount invested, and average deal size are included.

Growthink Survey

The Growthink Private Equity Funding Reports for the Third Quarter 2002 finds more than $4.9 billion of venture capital was invested in 554 private companies — a decline of 20 percent over the second quarter of 2002. Although companies securing investments only numbered 25 less than the previous quarter, those that raised funding rounds of $20 million or more dropped by 35 percent.

For major metropolitan areas, Growthink shows the San Francisco Bay Area continued to lead the way with $1.5 billion in investments, or 30.9 percent of the nation's total. Boston followed with $539 million (10.8 percent) and 58 deals, and New York, with 33 deals, was next at $259 million (5.2 percent). Despite having only nine investments, Chicago was the fourth leading metro area.

Fifth was the Research Triangle in N.C., an area that showed marked improvement over the prior quarter by moving from $123 million to $215.6 million — a 75.3 percent increase in VC investments. Combined, the top 10 metro areas accounted for 72.4 percent of the total activity for the third quarter. Following the Research Triangle were San Diego, Washington D.C., Orange County (CA), Los Angeles and Seattle.

Growthink reports only private, U.S. based companies that receive equity investments of $300,000 or more. The company does not collect information on venture capital investments in public companies, debt financing or other areas. The first quarter survey, including data by geographic region, state, metro area, and industrial sector, is available in individual sections or in its entirety at: http://www.growthinkresearch.com