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Net leads in US venture capital funding boom

Margaret Kane ZDNet.co.uk

Published: 07 Aug 2000 13:18 BST

Fuelled by the Internet, venture capital investments nearly doubled in the second quarter compared to a year ago, according to a new study. The National Venture Capital Association and Venture Economics reported that investments increased to $24.5bn up from $12.5bn in the second quarter of 1999.

While the number of new companies receiving funding rose slightly from the first quarter, from 1,627 to 1,695, the percentage of e-commerce investment plunged down around 44 percent.

"What has changed in recent months is the shift of interest from e-tailing to other technologies that will help move the new economy to the next level," Steve Lazarus, NVCA Research chairman and managing director of ARCH Venture Partners said in a release.

While e-tailing is losing steam, the tech market is still hot, with Internet-related investments accounting for more than 81 percent of dollars in the second quarter. Online specific, communications, and computer software and services were the biggest categories for investment during the quarter.

The communications/infrastructure category saw the greatest growth, jumping from 20.1 percent in the first quarter to 26.9 percent in the second quarter of 2000.

Companies based in northern California and the northeast of the US grabbed the most money, but the biggest gains came in the southeast and the midwest regions.

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