NVCA has released first quarter numbers for venture capital investment and it continues to look ugly. Venture investment hit only $3 billion in the first quarter of 2009, the lowest level since 1997, according to the NYTimes. Clean-tech companies = a lone bright spot in the 4th quarter of 2008 - had the steepest fall in investment, falling by 84%. More from the article:
Software companies received $614 million, a drop of 42 percent from the fourth quarter of last year. Quadriserv, which makes market data software for securities lending, was the biggest deal recorded in the sector, raising $34 million.
Internet companies raised $556 million, down 31 percent. The biggest deals were Obopay, a mobile phone payment service, and Twitter, the microblogging site, which each raised $35 million.
Biotechnology and medical device companies raised $989 million, a decline of 40 percent. Five of the 10 biggest deals in the quarter were medical companies, the biggest of which was Anacor Pharmaceuticals, which makes drugs for inflammatory and infectious diseases and raised $50 million.
According to the article, money is sitting on the sidelines and venture firms are busy tending to current portfolio companies amidst the uncertainty of the current economy and the dim outlook for exits from their investments:
Venture firms have been bruised by the economic crisis, which has made initial public offerings of venture-backed companies almost impossible and acquisitions much harder to come by.
As a result, investors are funneling time and money into existing portfolio companies instead of a new generation of start-ups. Only 132 start-ups raised money for the first time, the lowest number in 15 years.
Though venture capital funds raised $4.3 billion in the first quarter to invest in new companies, most are doing so slowly, waiting to see if the markets improve.
The full press release from NVCA can be read here (pdf).
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