Growth Strategies

Downtick for VC Investments in Q3

For the full year, however, investments might meet or exceed the recent high of $21.7 billion in 2002, according to a new survey.
Stephen TaubOctober 25, 2005

Venture-capital firms invested $5.3 billion in 714 companies in the third quarter of 2005, according to a survey by PricewaterhouseCoopers, Thomson Venture Economics, and the National Venture Capital Association.

Although the $5.3 billion was 15 percent lower than the figure for the previous quarter, it was 6 percent higher compared with the first quarter and 15 percent higher compared with a year earlier.

For the first nine months of 2005, VC investing totaled $16.3 billion, compared with $15.9 billion for the same period last year. For the full year, according to the survey, investments might meet or exceed 2002’s $21.7 billion, the highest level in the past three years.

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Investments in later-stage companies rose to $2.6 billion in the third quarter — a four-year high. This upward trend began in late 2004.

Funding for start-up and early-stage companies slipped to $1 billion in 216 companies, for year-to-date totals of $3.2 billion in 697 companies — on track to match 2004’s totals of $4.3 billion in 1028 companies, the study suggested.

Life-sciences companies continued their dominance among investment recipients, with $1.6 billion in the third quarter, while the $455 million invested in wireless companies represented a four-year high.