While not quite so dramatic as the Nasdaq’s continuing plunge, it would appear that the venture capital community’s interest in e-commerce plays has staged a dramatic drop-off since last March.
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Not surprisingly, domestic deal flow continues to remain concentrated in the Silicon Valley area. Of the 22 e-commerce investments made to date, six of the companies were located in Northern California. Nonetheless, that figure pales in comparison to the 34 start-ups that received funding in that region during the same period last year.
Sanrise Inc. of Dublin, Calif., has been the biggest benefactor of VCs’ generosity toward the e-commerce space, walking away with approximately $150 million in private equity financing. The Series B transaction was led by repeat backer Crosspoint Venture Partners. A consortium of new investors also jumped on board, including Comdisco Ventures, Exodus Communications Inc., Fenwick and West, GATX Ventures, Hitachi Ltd., Hitachi Data Systems, Morgan Stanley Dean Witter, Texas Pacific Group, Veritas Software Corp. and ubiquitous Silicon Valley legal eagles Wilson Sonsini Goodrich & Rosati.
Incubated by Crosspoint, Sanrise has signed on more than 600 data center and corporate customers, to which it provides managed storage area network services.
Interestingly, it seems that overall disillusionment with the sector’s performance has put VC money clips in a veritable vice grip in these already lean times. Just 69 firms have dished out a combined $430.62 million to date in 2001. That’s slightly more than a third of the $1.2 billion coughed up by a staggering 195 VC outfits for the same period last year.
Robyn Kurdek can be contacted at