Useful Stats I: 2nd Quarter VC by State, Region

No matter which source one uses, venture capital investments continued their decline during the second quarter of 2001. The Moneytree™ survey, released this week by PricewaterhouseCoopers and Venture One, Inc., found a 21 percent decline from the previous quarter. Second quarter investments fell to $8.2 billion from $10.4 billion in the first three months of the year. Only 669 companies received funding, down 11 percent from the 752 firms funded during the first quarter.



While the decline in venture capital funding has captured all the headlines, PricewaterhouseCoopers points out the most recent Moneytree™ survey revealed outside participation from non-traditional investors, such as corporations, angels and other private equity entities, is at its lowest level in three years. Venture capitalists provided 90 percent of the equity investment in venture-backed companies during the second quarter. For comparison, during the first quarter of 2000, venture capital only represented 76 percent of equity investments in venture-based companies.



PricewaterhouseCoopers elaborates, "corporations are investing less than one-tenth the amount they contributed last year, with investment declining from $3.8 billion in the first half of 2000 to $353 million in first half of 2001. Likewise, private placements of equity in the first half of 2001 are at one-third of last year's levels."



The Moneytree™ survey for the second quarter found deals for early, seed capital funding continued their plummet, comprising only 15 percent of venture investments. Mid-round funding also declined, while later-stage, more mature companies actually saw venture capital deals increase eight percent over the previous quarter.



SSTI has prepared the accompanying table presenting the Moneytree™ survey findings by state. For the first time, average deal size for each state is included in the table to highlight the idea that the total amount of funding secured may not be the best indicator of the amount of venture activity occurring in a state or region.



The Growthink Reports

SSTI also has become aware recently of another detailed report examining quarterly venture capital activity in a format that may be useful to state and local tech-based economic development groups. Total U.S. Private Equity Funding Report: Organized by Market Sector and Geography, prepared by Growthink, Inc., analyzes and profiles 921 companies funded in the second quarter of 2001 and the top investors that backed those deals. Growthink surveyed 2000 venture capitalists, angel groups and corporate investors to find deals totaling $10.8 billion for the second quarter. The California-based consulting group also interviewed more than 1,000 companies to verify information collected.



Detailed information for each company and each source of funding is provided in four market sector reports or individual reports for seven geographic regions: Bay Area, New England, the Central United States, Southeast, Northeast, Southern California and the Pacific Northwest. The geographic reports further define equity activity by state and/or metropolitan region.



More information about Growthink, the Total U.S. Private Equity Funding Report, and the individual market sector and geographic reports can be obtained at http://www.growthink.com