There has been a tremendous amount of money committed to venture capital over the past 5 and especially the past 3 years. And to put this into perspective, the amount committed to US VC’s in 2000 was ~= to the amount from 1983-1998 combined. As well the first half of ’01 is tracking with ’00, but…….
…if we look at the Q to Q amounts, we can see that commitment levels are falling, which is to be expected given all other conditions. *Interestingly there is a gap between the amount committed to venture funds and the actual amount that is being invested, and this gap has widened drastically over the past three quarters by over $13B. So there is truly a stockpiling of B’s, for which the investor know will be needed.??? Cash King?
It used to be that a $250M fund was considered very large, and in fact, many large venture firms did not raise funds this large until the late ’90, including firms such as, Oak, Polaris, and ARCH, among others who are active here in the NW. And impart, the proliferation of these mega- funds fueled the investment levels and trends that we have seen over the last 3 years created.
Well, the bubble is over, and that is truly what it was from mid ’99 to early ’01. *I think what is important to see here, is that even if the % decline continues @ the same rate, we will still see about $30B invest this year, easily making 2001 the 3 rd largest year for VC investment.
And speaking of this Q over Q rate of decline, we can see here that it is in fact decreasing…and is currently showing signs that it might be coming close to a bottom. *It is however, the 5 th straight Q to Q decline, but may be close to a bottom.
As you can see here, almost all IT sectors posted declines relative to its First Q level. The areas of modest increases included Elec/Comp HW & the Health Sciences. I think it is also important to note that there was a $2.2B decrease in investments from 1Q to 2Q, the combined decrease from CBS, Software, and Communications =$2.2B, making up the majority of this decline.