As Benjamin Franklin once said, nothing is certain in this world but death and taxes. Just ask George W. Bush, Al Gore or the array of Internet startups that are painfully realizing ? as money and time run out ? that they?re not going to be the next sure thing.
As the much talked about dotcom death count increases with each passing day, venture capitalists are becoming even more selective in their investments and, in a sense, getting back to funding the basics. The past few months have been witness to VCs intensifying their focus on companies that are enabling the Internet ? not just serving it.
According to our VentureXpert database, venture capitalists invested a total of $3.83 billion in 353 computer software and hardware companies, averaging deal size of about $10.85 million, during the third quarter of 2000. This marks an increase of nearly 81% from the comparable year ago period, when VCs invested $2.11 billion in 273 computer software companies, with an average deal size of $7.73 million. Compared with the second quarter of this year, VC disbursement in the sector dropped off a considerable 33%, with VCs investing $5.08 billion in 402 companies. The average deal size during that period was $12.63 million.
The Dynamic Duo
The two companies that received that received the largest funding rounds during the third quarter were Asera Inc. and Gemfire Corp.
Asera kicked off the third quarter with a $115 million Series C round of funding led by Bowman Capital. The provider of Internet solutions for the business-to-business demand chain was formed by Vinod Khoslam, who is also a co-founder of Sun Microsystems and a partner at Kleiner Perkins Caufield & Byers.
Gemfire, a planar integrated optical component company got the second place spot with a $72 million round of funding that attracted the likes of such venture firms as Kleiner Perkins and Mohr, Davidow Ventures.
Showing Them the Money
Intel Corp., Thomas Weisel Partners, Cisco System Inc., Kleiner Perkins and New Enterprise Associates were among the VCs doling out the most cash to the computer software and hardware sector during the third quarter.
Intel disbursed $46.93 million to a total of 11 companies, Thomas Weisel disbursed $46.35 million to four companies, while Cisco investing $45.39 million in five companies. Rounding out the group were Kleiner Perkins funding five companies for a total of $44.59 million and New Enterprise also funding five companies for a total of $43.54 million.