MoneytreeTM Finds VC Slip in 3rd Quarter

Venture-based investments in the third quarter of 2000 reached $17.6 billion, a decrease of 12.5 percent drop from the record $19.8 billion reported in the second quarter of 2000, according to the latest PricewaterhouseCoopers MoneyTreeTM Survey results. Investments, however, are still nearly double the $8.9 billion reported in the third quarter of 1999. The MoneytreeTM figures correspond with declines reported by other quarterly venture capital surveys compiled by the Venture Economics and the National Venture Capital Association.

Most of the 12.5 percent decrease in activity between the two most recent quarters is accounted for by a $1.9 billion drop in investments in Internet-related companies. The number of Internet-based companies receiving funding, however, only declined by 5 percent for the period. Survey analysts at PricewaterhouseCoopers report VC shifted significantly from website development, content and B2B/ecommerce to more tangible tools, networking, equipment and applications. Regionally, declines in total investments were reported in New England, the Southeast, and Texas while Silicon Valley and Metro New York remained relatively level.

A trend in fewer deals getting larger investments continues to be reflected in the latest MoneytreeTM results. Average funding per company has increased 55 percent since last year.

To assist Digest readers wanting to review the data on a state level, SSTI has prepared the accompanying table presenting the 3rd quarter results on a state-by-state basis. Links to the state distribution for previous quarters can be found at the bottom of that webpage or in the Digest Subject Index [discontinued] under "Venture Capital."

Complete MoneyTreeTM survey results can be found at: http://www.pwcmoneytree.com