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VC Investing Hits New Low
According to a recently released MoneyTree survey, VC's invested $6.2 billion in 787 companies last quarter, down slightly from the $6.3 billion invested in 1998Q4, and nearly 25% less than the amount invested in 2001Q4.
This compares to the biggest quarter in VC investing ever, $12.8 billion in 2001Q1. In that period, they funded 2,184 companies.
Only about 20% of the VC's recent quarter funds went to early-stage companies. This preference for later-stage investments is further implied by the average funding commitment: $8 million. Software continued to attract the most money, $1.1 billion, followed by networking, biotech and telecom players.
A number of theories have been advanced to explain this severly reduced activity. Perhaps among the most compelling are arguments that VC's are spending their energies and treasure propping up ailing prior investments, and their appetite for new deals has been diminished by the depressed demand for new tech products and a lackluster IPO market.
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