Communications Wrap: So Far, So Good for Third Quarter

Venture capitalists have continued to gravitate toward communications plays this quarter, investing $3.2 billion in 102 companies since the beginning of July. That figure almost doubles the $1.7 billion VCs invested in the sector during the same period last year, according to our VentureXpert database.

Although this quarter?s communications disbursements have still been outpaced by the $7.4 billion plugged into the Internet-specific sector, it has easily exceeded investments in computer hardware and software investments, and biotechnology investments, which have captured $1.9 billion and $435 million respectively.

XM Satellite Radio Inc., a provider of digital audio entertainment and information programming services, garnered $235 million, more than any other communications company during the third quarter to date. The Washington-based firm, which went public in October 1999, is backed by AEA Investors Inc., Clear Channel Communications Inc., Columbia Capital Corp., Columbia Capital Group Inc., Direct TV, General Motors Corp., Madison Dearborn Partners Inc. and undisclosed investors. Paris-based Louis Dreyfus Communications, a broadband networks infrastructure and communications services company, came in second with a $217 million infusion from DLJ?s Sprout Group affiliate.

VCs made $801 million worth of foreign investments in 23 communications companies during the first ten weeks of the third quarter, according to VentureXpert. Within the U.S., however, communications investors favored California, disbursing $733 million to 25 companies. The District of Columbia followed, with two companies garnering $360 million, after which came New Jersey with $258 million for six Garden State companies.