All U.S. Regions Gain by 60% or More; Internet-Related* Companies Lead the Way, Reports National Venture Capital Association and Venture Economics

BOSTON, Feb. 8 -- Venture capital investments last year reached a record $48.3 billion, an increase of 151.6% over 1998, according to figures released today by the National Venture Capital Association(NVCA) and Venture Economics (VE), a division of Thomson Financial Securities Data (TFSD). The Pacific Northwest and Northern California showed the largest percentage gains (210% and 215.2%), but every region of the United States increased by 60% or more.

Internet-related* companies were the biggest winners, attracting $31.9 billion for an increase of 354.8% over 1998, when they received just $7.03 billion. These companies also took a larger share of total funds, receiving 66.1% versus 36.6% in 1998.

E-commerce and Web content companies attracted the most dollars in the Internet-related* sector, showing a 458.1% percentage increase. These companies are demanding large investments because they are working to quickly create name recognition and a leadership position in their respective areas.

"This is excellent news for entrepreneurs all over the country, especially those in technology," said John Martinson, chairman of the NVCA. "More entrepreneurs are receiving funding than ever before. 1999 was a spectacular year for building companies, and we expect the upward trend to continue."

Geoff Yang, partner of Redpoint Ventures and a member of NVCA's board, was also enthusiastic about the report. He said, "Internet-related* companies are receiving the biggest piece of the pie because these companies have tremendous potential. The Internet is becoming an integral part of the economy in both the business-to-business and business-to-consumer markets."

ALL REGIONS GROW 50% OR MORE

Northern California and New England continue to attract the most dollars. However, Northern California and the Pacific Northwest showed the strongest growth rates. Significantly, every region in the U.S. experienced at least a 60% growth in venture capital investments. This trend shows that entrepreneurial communities are maturing throughout the nation, particularly in the Pacific Northwest, Mid-Atlantic, Rocky Mountains, Southeast and the Southwest. Each region offers a strong technology community, an educated workforce and a reasonably efficient infrastructure -- all important for a growing entrepreneurial community.

"Venture funding tends to follow the opportunities, wherever they may be," said Steve Lazarus, managing director of ARCH Venture Partners and a member of NVCA's board. "These statistics show that talented entrepreneurs can be found in many different communities throughout the nation, thus attracting more money to their respective regions."