SAN FRANCISCO — Venture capitalists invested slightly more money in the second quarter than they did in the first quarter, heralding a possible turning point in the industry’s three-year slump,according to industry data to be released today. The $4.28 billion placed in 669 venture capital deals during the three months ending in June represented a modest improvement from the $4.04 billioninvested in 647 deals in the quarter ended in March, according to a survey by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.<\/p>\n
It marked the first time that the nation’s venture capital activity had climbed from the previous quarter since the first three months of 2000 — a period that coincided with the stock market’s record highs.<\/p>\n
With the dot-com clamor reaching a fever pitch, venture capitalists poured $28.6 billion into 2,164 deals in the first quarter of 2000.<\/p>\n
The investments in startups have been shriveling ever since as venture capitalists struggled to cope with huge losses that piled up amid the rubble of bankrupt high-tech businesses.<\/p>\n
There’s now a sense the worst is over, helping to make venture capitalists feel more comfortable about taking on new risks, said Todd Dagres, a general partner with Battery Ventures.<\/p>\n
“I think we have turned the corner from pessimism to optimism,” Dagres said. “Nobody wanted to be out there while the knife was still falling. I think enough people now believe the knife has stuck in the ground.”<\/p>\n
Even with the change in sentiment, venture capital investment still remains below last year’s pace when the industry doled out $21.2 billion to startups. This year’s second-quarter represented a 28 percent drop from the $5.98 billion invested at the same time last year, according to the survey data.<\/p>\n
“We are still in a period where people are very nervous, but they’re not quite as fearful as three or four quarters ago,” said Doug Carlisle, of Menlo Ventures.<\/p>\n
The stock market’s robust rally of the past few months is a big reason why venture capitalists are feeling slightly better.<\/p>\n
A 21 percent second-quarter gain in the technology-laden Nasdaq composite index made venture capitalists feel a little wealthier after three years of mostly uninterrupted losses.<\/p>\n
The stock market gains also raised hopes that investors are becoming more receptive to the initial public offerings of startups. Venture capitalists depend on IPOs to reap profits from their investments.<\/p>\n
“There are reasons to be cautiously optimistic, as long as the public markets cooperate,” said Tracy Lefteroff, of PricewaterhouseCoopers.<\/p>\n
With an estimated $70 billion to $80 billion available for future investments, venture capitalists can’t afford to get too excited about the recent signs of an economic recovery, said Mark Saul, of Foundation Capital.<\/p>\n
“There’s still too much money out there chasing too few good deals,” Saul said. “You don’t want a situation where things go from being depressed to getting giddy. Dramatic mood swings tend not to be helpful in venture investing.”<\/p>\n","protected":false},"excerpt":{"rendered":"
SAN FRANCISCO — Venture capitalists invested slightly more money in the second quarter than they did in the first quarter, heralding a possible turning point in the industry’s three-year slump,according to industry data to be released today. The $4.28 billion […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-606","post","type-post","status-publish","format-standard","hentry","category-hedgeco-news"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/606","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=606"}],"version-history":[{"count":0,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/606\/revisions"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=606"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=606"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=606"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}