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Venture Capital Investments Increase 266% to 22.7 Billion in Q1 2000
Internet-Related Companies Capture the Most Investments
Thomson Financial Securities Data
22 Thomson Place
Boston, MA 02210
www.tfsd.com
www.ventureeconomics.com |
National Venture Capital Association
1655 N. Ft. Myer Dr., Ste. 850
Arlington, VA 22209
www.nvca.org |
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| CONTACTS: |
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| Monica McGlinchey (TFSD) 617.856.1355 |
John Taylor (NVCA) 703.524.2549 |
BOSTON - May 4, 2000 — The National Venture Capital Association (NVCA) and Venture Economics (VE) today announced venture capital continued to investinvestments in entrepreneurial companies soared to record levels in the first quarter of 2000. In the first quarter of 2000During Q1 of this year, venture capitalists invested $22.7 billion into companies, compared to $6.2 billion in the first quarter of 1999 — representing a 266 percent increase.
The number of companies receiving venture-backed financing also increased dramatically. In the first quarter of the year, Entrepreneurs continue to benefit from the growth of the venture capital market — 1,557 companies received financing in Q1 2000, compared to only 851 companies in Q1 1999.
"Average investments per company have risen as because it has become increasingly capital intensive for an entrepreneurial companiesy need more capital to establish a leading market position," said Steve Lazarus, chairman of NVCA’s Research Committee and managing partner of ARCH Venture Partners. "In addition, tThe Internet has broken down regional boundaries, making target markets larger. Today’s young companies must also establish global leadership in their early stages of development, which requires significant infrastructure investment."
STAGE
Venture capitalists are focusing their investments on companies in their earlier stages of their development. In Q1 2000, 85.2 percent of all venture capital investments went to companies in the early or expansion stage. This is in contrast to 64.8 percent in the first quarter just a year ago. Expansion- stage companies overwhelming received the largest percentage of investment in Q1 2000, with 61.9 percent% of all investments focused on companies in the growth phases.
INDUSTRY
There has been little change over the past year as to the industries that are attracting the most venture capital dollars. Computer-Related and Communications remain the most attractive industries, with Computer-Related companies receiving $12.4 billion and Communications companies receiving $6.02 billion this quarter. When analyzingIn the Internet-Related* investments category, there has been a slight shift in areas of interest. Whereas Internet-Related Services attracted the most interest in Q1 1999, B2B Internet-Related investments attracted the most interest in Q1 2000. Overall, Internet-Related* companies received more investments than any other sector, receiving a total of $17.05 billion in Q1 2000.
REGIONAL GROWTH
All regions continue to grow, with Northern California and the Northeast capturing the most investments and experiencing the most growth. Among the states, Illinois, Georgia and New York had the highest growth rates.
TOTAL INVESTMENTS
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Quarter
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No. of Companies
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Average Per Company
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Sum Invested ($millions)
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2000 — Q1
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1,557
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$14.57
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$22,684.35
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1999 — Q4
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1,546
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$13.60
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$21,021.77
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1999 — Q3
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1,264
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$10.29
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$13,004.83
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1999 — Q2
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1,118
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$9.44
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$10,554.58
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1999 — Q1
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851
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$7.24
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$6,161.19
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STAGE
| Stage |
Pct. of Total Invested Q1-2000 |
Pct. of Total Invested Q1-1999 |
| Early Stage |
23.31% |
21.29% |
| Expansion |
61.89% |
43.48% |
| Later Stage |
11.82% |
28.55% |
| Buyout/Acq. |
2.9% |
6.46% |
| Other |
.09% |
.22% |
MAJOR INDUSTRY GROUPS ($ Millions)
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No. Companies
Q1-2000
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Avg. Per Company
Q1-2000
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Sum Invested
Q1-2000
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Sum Invested
Q1-1999
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| Computer Related |
859
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$14.47
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$12,430.71
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$2,565.80
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| Communications |
335
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$17.98
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$6,021.98
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$1,632.00
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| Non-High Tech |
151
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$15.07
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$2,274.89
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$802.05
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| Medical/Health |
114
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$6.94
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$791.52
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$678.98
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| Semiconductors/Electronics |
45
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$14.53
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$653.75
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$267.43
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| Biotechnology |
53
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$9.65
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$511.51
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$214.93
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| TOTAL |
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$22,684.35
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$6,161.19
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INTERNET-RELATED* INVESTMENTS
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Internet Group
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Sum
Q1 2000
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Percent of Internet Related
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Sum
Q1 1999
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Percent of
Internet Related
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| B2B |
$4,719.77
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27.67%
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$647.87
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19.96%
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| B2C |
$3,205.53
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18.79%
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$541.14
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16.67%
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| Communications/Infrastructure |
$5,158.45
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30.25%
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$890.97
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27.45%
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| Services & Other Internet Related |
$3,971.72
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23.29%
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$1,166.29
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35.93%
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| Total |
$17,055.47
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100.00%
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$3,246.27
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100.00%
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**Internet-related describes companies that provide content, e-commerce, hardware or services to the Internet economy. Internet-related companies are found in all industry sectors.
REGIONAL BREAKDOWN
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Region
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Amount Invested
Q1-2000
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Amount Invested
Q1-1999
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Percentage Growth
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| Northern California |
$7,945.58
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$1,779.43
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347%
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| Northeast |
$5,439.19
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$1,374.24
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296%
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| Southeast |
$1,851.81
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$525.09
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253%
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| Southern California |
$1,742.84
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$579.36
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201%
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| Southwest |
$1,617.66
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$474.85
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241%
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| Midwest |
$1,360.35
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$464.01
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193%
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| Mid-Atlantic |
$1,359.77
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$431.83
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215%
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| Northwest |
$827.39
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$279.44
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196%
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| Rocky Mountain |
$509.65
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$248.22
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105%
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STATE BREAKDOWN
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State
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Amount Invested
Q1-2000
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Amount Invested
Q1-1999
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Percentage Growth
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| California |
$9,688
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$2,358.79
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311%
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| Massachusetts |
$2,167
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$712.94
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204%
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| New York |
$1,770
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$400.77
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342%
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| Texas |
$1,514
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$422.85
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258%
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| Georgia |
$700
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$122.39
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472%
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| Washington |
$600
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$250.24
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140%
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| Illinois |
$600
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$63.17
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850%
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The National Venture Capital Association (NVCA) represents over 370 venture capital and private equity firms. NVCA's mission is to foster the understanding of the importance of venture capital to the vitality of the U.S. and global economies, to stimulate the flow of equity capital to emerging growth companies by representing the public policy interests of the venture capital and private equity communities at all levels of government, to maintain high professional standards, facilitate networking opportunities and to provide research data and professional development for its members.
Venture Economics, a Thomson Financial company, is the foremost information provider for private equity professionals worldwide. Venture Economics offers an unparalleled range of products from directories to conferences, journals, newsletters, research reports, and the VentureXpert database. For over 35 years, Venture Economics has been tracking the venture capital and buyouts industry. Since 1961, it has been a recognized source for comprehensive analysis of investment activity and performance of the private equity industry. Venture Economics maintains long-standing relationships within the private equity investment community, in-depth industry knowledge and proprietary research techniques. Private equity managers and institutional investors alike consider Venture Economics information to be the industry standard. For more information about Venture Economics, please visit www.ventureeconomics.com.
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