PwC Shows Venture Capital Remains Strong Overall

In spite of the extreme market fluctuations, one area, venture capital investing, has remained a solid, stabilized force, at least for the 1st quarter of 2006, according to a report released by PricewaterhouseCoopers this month. A brief overview of the venture capital picture for the 1st quarter of 2006 reveals the following. Investments in biotechnologies declined; investments in the Media and Entertainment sector, reached a four-year high; software investments rose, and remained the largest, single industry category capturing 26% of all deals. Internet-specific companies generated a 10% increase over their investment dollars for the 4th quarter of 2005, which is a continued slow rise in the investment total. "Internet-specific" is a classification assigned to businesses that are fundamentally dependent upon the internet, regardless of industry category. The stage of development for venture capital investing also provided a few surprises. Start-up funding showed a 14% drop in 1st quarter 2006, from the 4th quarter of 2005; expansion stage investing reported a modest increase, while Later Stage investing was relatively flat. Overall figures for 1st quarter 2006 posted the following results: Startup/Early stage businesses accounted for 29% of investments; Expansion Stage for 38%, and Later Stage for 33%. As stated by Mark Heesen, president of the National Venture Capital Association, "As far as investment equilibrium, it doesn't get much more stable than this." Industry sectors that did receive larger first-time investments were Semiconductors, Business Products and Services, Media and Entertainment, IT Services, and Healthcare Services. These areas are also experiencing some technological innovations that should move them further toward greater efficiency, better risk management, and increased profitability. The previous information was taken from a joint report issued by PricewaterhouseCoopers and the National Venture Capital Association. Further information can be obtained by viewing the Money Tree Report at either the PricewaterhouseCoopers website www.pwcmonetree.com or the National Venture Capital Association website www.nvca.org By Rene' V. Richards, Staff Writer, Big4.com, August 2006