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US venture investment tails off in Q4 2000

US venture investment figures tailed off in the final quarter of last year, according to the results of the PricewaterhouseCoopers Money Tree Survey in Partnership with Venture One. In that quarter, $13.7 billion was raised in 853 venture financing rounds, which constitutes a nine per cent decrease in the number of financing rounds and an 18 per cent drop in the amount invested compared to the previous quarter. The fourth quarter decline is the third consecutive quarter of decline.

Internet companies saw an 11 per cent decline in the number of financing rounds and a 19 per cent decrease in amount raised, but infrastructure companies saw slight increases.

Software/database investment declined mildly from its peak in the third quarter of 2000, but elsewhere investment in e-commerce companies decreased 92 per cent from its peak in the last quarter of 1999 and now accounts for 1per cent of Internet investment.

Healthcare ended its record-breaking year with a moderate downturn, although investment increased in the medical devices and biopharmaceuticals segments.

Biopharmaceuticals companies, which raised $761.9 million in the fourth quarter, have seen an 86 per cent increase since the same period in 1999 thanks to a 70 per cent increase in biotechnology investment.

Despite the slow-down in the investment rate of US venture funds in the last quarter of 2000, total investment for the full year was $68.8 billion. This represents an 80 per cent increase over the amount invested in 1999. During 2000, Internet companies raised $56.9 billion, which represents an increase of 92 per cent on 1999 figures.