NCPA - National Center for Policy Analysis

Venture Capital Put on Hold

October 8, 2001

Already spooked by the dot-com collapse, venture capitalists have gone further into retreat in the wake of Sept. 11.

  • Third-quarter venture investments totaled $6.7 billion -- down 72 percent from the same quarter a year ago, according to the industry newsletter VentureWire.
  • The number of private companies receiving venture capital dropped to 540 -- down 67 percent from a year earlier and down 39 percent from the second quarter.
  • Analysts -- who expect the declines will continue through year's end -- predict that many biotech and wireless technologies will continue to get funds.
  • But since venture capitalists generally look for business trends that are more than six months old before they consider them solid enough to invest in, a rush of VC money into startups that appear ripe in the wake of the events of Sept. 11 is unlikely just yet, says Brenda Gavin of S.R. One Limited, a Pennsylvania VC firm.

Source: Jim Hopkins, "Venture Capital Falls 72 Percent from Last Year," USA Today, October 8, 2001.

For text


Browse more articles on Government Issues