Internet Specific Wrap: VC Disbursements Keep Sliding In Q2

For those who thought the post-dotcom bubble burst had peaked during the first quarter, preliminary figures from Q2 2001 could come as a bit of a surprise.

According to our VentureXpert database, VCs have invested a total of $1.77 billion into 145 Internet-specific companies so far during the second quarter of 2001. This signals a marked decrease in activity from the pace set by VCs during the first quarter, when 406 companies divvied up $4.21 billion in venture funding. While Q2?s preliminary numbers will grow as the final figures are tabulated, the slow down is dramatic when compared to last year?s Q2 totals when VCs pumped nearly eight times as much capital ? a sizable $13.07 billion – into 871 companies.

Not only have fewer companies receive funding over the past three months, but those companies lucky enough to attract support left the negotiating table with smaller checks than the previous year. Internet-specific companies, on average, received $12.23 million in venture funding during Q2 2001, a fairly significant drop from the $15.01 million companies took home during Q2 last year.

Follow the Money

While the Internet-specific sector no longer attracts the massive flood of funding it once did, some companies still were able to close impressive financing rounds. Q2?s top five fund-raisers split $309.5 million altogether, as three of those business managed to surpass $50 million mark.

Arlington, Texas-based Clearwire Holdings Inc., a wireless Internet access provider whose backers include Goldman, Sachs & Co., closed a $97 million round in April. Taking the number two position is Vancouver, Wash.-based New Edge Networks Inc. The broadband access provider, whose backers include Accel Partners, Crosspoint Venture Partners, Greylock Partners and Intel Corp., closed a $77.5 million fourth round of funding in April. The third member of the trio was Boulder, Colo.-based DataPlay Inc., an Internet and consumer electronics company, which closed a $55 million round in June.

April took the top spot as the most lucrative month to receive venture financing in Q2, as 58 companies split $732.56 million for an average funding round of $12.63 million. June came next with 44 companies receiving a total of $539.40 million in funding for an average of $12.26 million per company. May brings up the rear with 43 companies averaging $11.65 million for total disbursements of $500.76 million.

Alistair Christopher can be contacted at