In venture capital, they’re investing like it’s 1994 — back when the live-action version of the The Flintstones was on the big screen and everyone was gushing over the Apple Performa.
During the second-quarter, venture capital investment in startups sank to $3.7 billion — the lowest amount since 2005.
And according to the National Venture Capital Association and PricewaterhouseCoopers, the number of first-time investments during the quarter, 141, was the lowest amount in a quarter since 1994.
This meager activity is actually an uptick over the first quarter, when VC plummeted 50% from the prior quarter to $3.2 billion.
- The $3.7 billion invested in startups is down from $7.6 billion y/y.
- 2009 VC investment is projected to reach less than $14 billion. That’s half as much money as was invested last year.
- Some good news: The youngest startups raised $1.5 billion during the quarter, up from $885 million in Q1.
- Bio-tech companies led the way, raising $1.5 billion.
- Green tech raised $287 million, down from $1.2 billion y/y.
- Internet companies raised $524, from $1.7 billion during same quarter a year ago.
Dow Jones, the source of this chart, titles it 'Venture capital bounces back in Q2.' That's optimistic!
In reality, it's only approaching 2005 investment levels, back when Web 2.0 was just heating up.
Source: Dow Jones Venture Source
The Q109 to Q209 bounce looks even smaller after everything but startup deals is filtered out. These days, VCs are more apt to put their money into late-stage companies that could sell or go public much sooner.
Bio-tech companies led the way, raising $1.5 billion. Green tech raised $287 million, down from $1.2 billion y/y.
Internet companies raised $524, from $1.7 billion during same quarter a year ago.
VC investments into both Internet-specific and clean tech companies is off big year-over-year, but while Internet investment continued to sink in Q2, clean tech saw a small bounce.
Why was Q2 investment so low? One reason could be that according to a Polachi Inc. survey of 138 venture capitalists, VCs are very worried about when and if they'll get any return on their investments.
These VCs have good reason to be worried! During the year through Q109, the number of venture-backed IPOs was one.
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