NCPA - National Center for Policy Analysis

Venture Capital Catapults To New Records

February 7, 2000

By nearly every investment standard, available venture capital soared last year to set new records. Investments in 1999 exceeded the previous three years combined. They tripled in the fourth quarter and more than doubled for the entire year.

  • According to the National Venture Capital Association and the firm Venture Economics, investments hit $48.2 billion in 1999 -- up from $19.3 billion the previous year.
  • The research firm VentureOne Corp. -- which uses a narrower definition of venture investing -- figures that disbursements hit $36.5 billion in 1999, compared to $14.9 billion in 1998.
  • Two-thirds of the 1999 money went to Internet-related companies -- with firms in Northern California receiving $16.2 billion.
  • Businesses in northeastern states snagged $10.1 billion in funds last year.

The number of U.S. companies funded last year soared 24 percent above the previous year, to 3,619. After Internet-specific companies, the biggest 1999 recipients included companies in communications, computer software and services, health care, semiconductors and consumer products.

According to reports, venture investors have been competing with each other for the attentions of entrepreneurs. Insiders report that the quality of business plans being submitted has not suffered from the avalanche of funding -- in fact, if anything, the quality of ideas has improved.

A partner in one venture firm likened the wealth of new applications for capital to "standing under a waterfall trying to take a drink." Experts don't see the pace slowing this year.

Source: Don Clark, "Spurred by Tech Frenzy, Venture Firms Set Record in Investments Last Year," Wall Street Journal, February 7, 2000.


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