Slow Q3 for venture capital companies
October 19, 2009
According to research posted by Dow Jones VentureSource and cited by www.santacruzsentinel.com, the US venture capital investments in Q3 declined by 6% in comparison to Q2. The research showed that the private equity investment in most of the sectors has significantly declined thus putting 2009 on pace to be the slowest venture capital funding year since 2003.
The VentureSource notes that despite the steady increases in the economy and stock market performance, the venture capital investors show great cautions in their investments and therefore the prevailing investments in expansion stage companies comes as no surprise.
The one bright spot in the research is the increase in the venture funding for the web-based businesses. In fact, the venture capital financing for web-based businesses surpassed the software investments during this quarter, and surprisingly surpassed its own result during Q3 of 2008. The information services sector, including Web 2.0 companies, received $627MM, a 13% increase from the $567MM invested in Q3 of 2008. On the other hand, the software sector recorded $581MM, a 55% decline from the $1.3 billion invested in the same period last year, marking its lowest quarterly venture capital investment since 1996.