Venture Capital Explodes During 2nd Quarter of `99

Buoyed by a strong national economy, venture capital firms have invested at an all-time during the 2nd quarter of 1999, according to the latest quarterly survey by PricewaterhouseCoopers. At $7.61 billion for the quarter, venture capital investments were more than double the total reported only one year ago. The current survey reflects the investment activity of 684 venture capital firms.

Three of the last four surveys have revealed record levels of investment. The previous high, set in the first quarter of 1999, was $4.31 billion -- 41 percent over the earlier record of $3.77 billion set during the third quarter of 1998.

James Atwell, Managing Partner of the Venture Capital Practice of PricewaterhouseCoopers, predicts the current record will reign longer than previous highs. "All the stars were aligned in the second quarter: a solid economy, a favorable IPO market and a strong stock market. That combination resulted in a level of investment that is not likely to be eclipsed in the near future."

Average funding per company rose 57 percent during the second quarter to $7.4 million versus $4.9 million a year ago. The number of companies receiving venture capital investments climbed to 992, 30 percent higher than the same period in 1998.

Technology-related companies accounted for 90 percent of all investments for the second quarter of 1999. Compared to the second quarter of 1998, the number of Internet-based companies receiving investments more than doubled to 412 in the second quarter of 1999. These same firms received $3.8 billion -- four times the amount Internet companies received twelve months ago, and greater than all of 1998's Internet-based VC investments combined.

Most regions of the country also set new records for venture capital investment, according to the survey. Silicon Valley held its leadership position, accounting for 34.8 percent of all venture capital investments reported. The New England region, anchored by the Boston metro area, saw investments top $1 billion for the first time.

Reviewing investments on a state by state level, however, reveals a wide disparity of venture capital activity geographically (see accompanying table).

Details of the PricewaterhouseCoopers Money TreeJ survey of Venture Capital Investments for the 2nd quarter of 1999 and four previous quarters can be viewed at http://204.198.129.80/highlights.asp