A Venture Capital Rebound?
By Rex Moore (TMF Orangeblood)
May 27, 2003
This is something many Wall Street watchers have been waiting for: signs that venture capital activity may be on the rebound. An MSNBC story that includes feedback from several firms suggests that 11 straight quarters of decline in VC funding may finally end when new numbers are released in a few weeks.
For instance, Advanced Technology Ventures (ATV) -- a VC firm with offices on both coasts -- has already exceeded the number of deals it did all of last year. One of ATV's partners told MSNBC that "the pendulum swung too far" last year. That may not mean a whole lot in and of itself, but ATV also says it's seeing better business models and better management teams this year.
Of course, it's not so hard to rebound from awful numbers. The first-quarter Ernst & Young/VentureOne Venture Capital Survey saw quarterly venture investment drop below $4 billion for the first time in five years. The $3.4 billion invested represented a 21% drop from the previous quarter. Additionally, the total number of deals dropped 12% to 404.
Even the Ernst & Young report included signs of optimism, however, as it showed venture capital transactions increasing 43% from January to February and 40% from February to March. Another interesting note: the number of deals is on par with 1996, and dollars invested are in the 1997 range.
For a much more in-depth look at the state of VC investing, be sure to read The Future of Silicon Valley? by Tom Jacobs.
RSS Headlines
Fool UK
