US Venture Capital Moving from IT to Clean Energy
US venture-capital investment shifted from information technology to clean and renewable energy as total investment sank 7.1% last quarter compared to the same period last year, according to Dow Jones VentureWire.
The $7.3 billion invested in 583 financing rounds last quarter is down from the $7.9 billion put into 673 rounds during the same time in 2007, according to VentureSource, a research unit of VentureWire. The 583 financing rounds was the lowest third-quarter total since the third quarter of 2004, when there were 549, the data show.
Meanwhile, the $22.2 billion invested in 1,916 rounds for the year so far is down only 4% from last year’s $23.2 billion deployed in 2,082 rounds through nine months. But the relatively steady performance is a prelude to a considerable fall-off that’s coming this quarter, some investors said.
The financial meltdown is prompting firms to spend more time with existing companies than on new deals, and with stock prices plummeting, some say their next new investment will likely be in a public company, not a start-up.
One sector falling especially hard: information technology, where just $2.7 billion was invested in 270 financing rounds last quarter, down 20.6% from the $3.4 billion injected into 342 rounds in the third quarter of 2007.
The drop-off in IT investing also reflects growing interest in a new sector, clean and renewable energy. Venture firms pumped $1.1 billion in 32 financing rounds in this market last quarter, up 90.7% from the $619.5 million invested in 35 rounds during the corresponding period of last year. The $2.4 billion firms have invested in 86 rounds this year already exceeds last year’s full-year total of $1.6 billion in 97 financings.
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