Financial Services Wrap: Disbursements Take a Nose Dive

It?s no surprise that venture capital investments are have dropped off considerably ? especially in the financial services sector, where disbursements are down nearly 60% from last year.

According to our VentureXpert database, venture capitalists invested a total of $2.1 billion in 170 financial services companies in the first half of 2001. This marks a staggering decrease in activity compared to the first half of 2000, when VCs pumped $5.2 billion into 132 companies.

Even more telling is the 80% drop-off in investments between the first and second quarters of the this year: $23.5 million was invested in 77 companies in Q1, whereas just 39 companies received a combined $4.7 million in Q2. And the future doesn?t look any brighter. To date, there have been only a mere handful of fundings in the financial services sector.

Making it Happen

Some of the companies lucky enough to garner venture backing in the first half of the year include Mutual Risk Management Inc., Optical Capital LLC and MyCFO Inc.

Hamilton, Bermuda-based Mutual Risk Management, a provider of full-service management for captive insurance companies, closed a $112.5 million round of funding in mid-April to take the top spot. The company’s venture backers include Century Capital Management Inc., First Union Capital Partners and High Ridge Capital.

Optical Capital, based in Columbia, Md., snagged second place, closing a $60 million round in March with funding from Gilbert Global Equity Capital, Kinetic Ventures Inc. and New Enterprise Associates.

Rounding out the top three is Mountain View, Calif.-based MyCFO Inc. The company closed a $45 million financing in March, and its venture backers include Amerindo Investment Advisors Inc., Barksdale Group, Kleiner Perkins Caufield & Byers, Northern Trust Venture Capital, Presidio Venture Partners and RSA Ventures.

Contact Jennifer Strauss at: