Venture capital funding news from the Internet-specific sector is becoming a bit like new country music: you do not need to listen to know it is a sad song.
According to our VentureXpert database, VCs have invested a total of $489.11 million into 46 Internet-specific companies so far during the third quarter of 2001. This represents a staggering fall-off in activity in comparison to the same period of time during the third quarter of 2000, when VC?s managed to pump $4.84 billion into 284 companies. While it is possible that the pace of investment could pick up as the quarter progresses, it seems a near certainty that last year?s Q3 totals — $11.65 billion into 768 companies – will remain far out of reach.
Not only has the pace of investing dropped off markedly, the average amount of capital given to developing companies has also decreased by nearly one-third. To date, companies are averaging $10.63 million per financing, while companies funded during Q3 2000 received an average of $15.17 million.
Q3?s six biggest deals so far split a total of $225 million, while only one of those companies rounds of funding managed to hit the $50 million mark. In comparison, Q3 2000?s six biggest deals split $839.7 million in venture funding, as every portfolio company managed to haul in at least $100 million.
McLean, Va.-based Starband Communications Inc., which provides high-speed Internet access via satellite to residential consumers and small office customers closed a $50 million round of funding in mid-July to take the top spot among fund-raisers so far. The company?s venture backers include Microsoft Corp. Coming in second is Milpitas, Calif.-based Velio Communications. The Internet infrastructure company, whose venture backers include such heavyweights as Sequoia Capital and Redpoint Ventures, closed a $45 million round in late July.
Contact Alistair Christopher at