It is no secret that a large portion of venture capital investments go to technology companies, but in 1999 the number soared to record heights. US venture capital firms invested $32.4 billion in technology companies in 1999, which represents over 90% of the total for the year. What is even more interesting is the amount of money being invested in Internet-related ventures, climbing to $19.9 billion in 1999. Internet-related Investment was distributed among companies that provide Internet tools, access, content and services, but it was the e-commerce category that was awarded twice the capital as any other Internet-related category.

Below are some headlines referring to the incredible investment opportunity that the Internet provides. Links to complete stories on the Web have been included where available.

** Note that the items are sequenced by date.

Industry Stays Committed to Early Stage Investing
Venture Economics and the National Venture Capital Association (08/06/01)

According to the latest statistics from Venture Economics and the National Venture Capital Association (NVCA), second quarter commitments to venture capital funds decreased 42% from the previous quarter, but continued to remain at healthy levels. All told, 65 U.S.–based venture capital funds raised $9.7 billion, compared to $16.7 billion raised by 96 funds in first quarter of 2001. Fund raising activity was down 68% from a year ago, when venture capital enjoyed its largest quarter, with 178 funds pulling in $30.3 billion. However, the second quarter was still significant compared with commitment totals during the past decade. While 2001 is unlikely to eclipse totals of the prior two years, it is still on pace to receive the third-highest amount of capital raised since Venture Economics started tracking this market back in 1969.

Venture capitalists continued to focus their efforts towards raising early stage funds last quarter, as 37 of the 65 funds raised had such a focus. The $6.5 billion raised from these funds represented 67% of the $9.7 billion raised. Balanced stage funds received 29% of the total capital, with 21 funds raising $2.8 billion. Venture capitalists have continually focused on early stage investing knowing that historically it has produced more attractive returns.

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E-Retailers Bounce Back
InternetWeek (08/03/01)

Quick quiz: What industry sector features stocks that this week rose 301 percent, 573 percent and 856 percent from their 52-week lows? Energy companies driven by soaring oil prices? Financial services helped by falling interest rates? B2B short-sellers cashing in on the crash? Nope. The answer is, e-retailers, a sector making one of the most surprising comebacks since since the return to fashion of bellbottoms. And for those playing along at home, the stock increases apply, respectively, to Travelocity, Expedia and Priceline. The story doesn't end with these front-runners, each of which also reported strong revenues--and in some cases even profits--this week. Amazon is also hanging in there, its stock hanging in the low-to-mid-teens. This from a company some thought would run out of cash this year.

Also on a relative roll are brick-and-mortar retailers, which Nielsen/NetRatings this week reported are registering healthy traffic numbers, led by Walmart.com, Bluelight.com, Target.com and others. The recent decisions by Wal-Mart and Kmart to "spin-in" their e-retail operations appear to be more of a reflection of changing market realities--no IPOs any time soon--than a complete failure of the e-retail model. What lessons can we learn from these surprise e-retailing successes?

These are lessons any e-business would do well to mind. That they come from the back-from-the-dead e-retail sector is one of the year's most surprising, but welcome, developments.

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More Net Firms In Profit Than Might Be Expected
NUA Internet Surveys (04/12/01)

ActivMedia Research reports that 61 percent of mid-sized online businesses and 39 percent of large online firms are profitable. A further 17 percent of mid-sized Internet-based firms and 25 percent of large firms expect to be profitable within a year. ActivMedia defines a mid-sized Web business as one with annual revenues of between USD100,000 and USD999,000. Large businesses are defined as those with yearly revenues of USD1 million or over.

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Venture Capital Investments Achieve Record Levels in 2000
National Venture Capital Association (01/29/01)

Venture investments in emerging enterprises reached $103.0 billion in 2000, a record level and 73.5% more than last year's total of $59.4 billion, according to statistics released today by The National Venture Capital Association and Venture Economics. As anticipated, venture capital investment slowed in the 4th quarter of 2000 as the industry stepped back from a torrid pace.

"The venture industry achieved record levels in 2000, but after five years of exceptional and unprecedented growth, evidenced by a ten fold increase in investments made, the industry is catching its breath," stated Mark G. Heesen, president of the National Venture Capital Association. "That said, venture capitalists are still raising new money, many have sufficient capital in their coffers and deal flow remains at healthy levels."

Although many in the business world have declared Internet investing dead, data shows that venture capitalists believe that the Internet will continue to have a dramatic impact on how people live and work in the future. In fact, Internet Specific companies continued to attract over 40% of all venture investment in the 4th quarter of 2000. The venture community's focus is moving toward new business models and technologies that will help propel Internet development forward.

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Tech Funds Soar in 2001
CNN Financial Network (01/29/01)

Investors might think tech funds have been caught in a bad soap opera over the past year. One minute the funds are the darlings of Wall Street, and the next they're on their death beds with their worst losses in 16 years. And now, like a character on a respirator who snaps out of a coma, tech funds are delivering some of the best returns of 2001.

"Last year was a year of unprecedented volatility," said Paul Wick, manager of the $8 billion Seligman Communications & Information Fund. "The euphoria is gone and we're back to reality." Tech funds in 2000 lost money for the first time since 1984, breaking one of the longest winning streaks of the bull market. The category lost an average of about 27 percent, according to Chicago fund researcher Morningstar. But this year, despite a few volatile trading days for the Nasdaq composite index, tech funds have bolted out of the gate. Tech funds account for 13 of the top 25 domestic stock funds tracked by Morningstar. The average tech fund is up 8.86 percent year to date as of Jan. 25, compared with 1.86 percent for U.S. domestic stock funds, Morningstar said.

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Venture Capitalists Focus On "Red Hot" Internet Space
NUA Internet Surveys (08/21/00)

Internet-related investment was the most popular investment with venture capitalists in 1999, accounting for 56 percent of all investments (USD19.9 billion), according to a new report from PricewaterhouseCoopers. Venture-backed investments increased by 150 percent overall. Investment in technology companies rose to USD32.4 billion in 1999, accounting for over 90 percent of all investment, as venture capitalists continued to show support for Internet initiatives.

B2C sites captured most of the investment in Internet technologies, with a USD4.6 billion share of the pie (up 1,092 percent from the previous year). There is continued strong investment in B2B projects also, with investment up 908 percent to USD2.64 billion.

The venture capital market should remain in excellent health, with technology continuing to drive Investment, and the Internet leading the way.

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Venture Capitalists Still Like Dot-Coms
Computer-World (08/15/00)

Venture capitalists are still enamored of technology companies in general and dot-com companies in particular, despite a rocky year on Wall Street. From 1997 to 1999, venture capital investments rose from $11.5 billion to $35.6 billion, and investments this year have already surpassed that mark, according to the Money Tree National Survey conducted by New York-based PricewaterhouseCoopers. And of those investments, technology companies received 95% of all funding in the second quarter of this year, according to the survey.

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Don't Look for Dot-com Retail's Demise
ComputerUser.Com Inc. (05/22/00)

Reports of online retail's death have been greatly exaggerated. That at least, is the view of Adam Schoenfeld, vice president and senior analyst of Jupiter Communications, who made the remarks to open the second and final day of the company's Shopping Forum in Chicago. "I think we've entered a phase now, where companies will rise to the fore - both traditional and pure plays. And good pure plays will start to move towards a revenue model and to enter profitability that may allow them to support their financing. We think there are some very viable strategies for online retailers. And that's for pure plays, traditional merchants and hybrids," he said.

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Internet Start-Ups Continue to Attract VC
NUA Internet Surveys (05/04/00)

A new report from the National Venture Capital Association and Venture Economics finds that investment in US companies increased by 266 percent in Q1 of this year. The total quarterly figure, USD22.7 billion, is more than three times greater than that of the first quarter last year, USD6.2 billion, and beats the record quarterly investment figure of USD22 billion reached in Q4 1999.

Despite the disappointing performance of tech stocks last month, investors are optimistic about the ultimate profitability of Internet companies. USD17.05 billion, three quarters of total investment money, was invested in Internet related companies. Of that, 27.6 percent was in B2B, 18.7 percent was in B2C, 30.25 was in communications and 23.29 percent was in services and other Internet related areas.

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Majority of US VC Goes to Net and IT Firms
Pricewater-HouseCoopers (02/22/00)

Venture capital funding for Internet and technology companies in the US rose sharply in 1999 and accounted for 56 percent of all venture capital investment, according to the annual Money Tree survey from PricewaterhouseCoopers. Non-IT venture capital funding dropped for the first time in many years.

B2C ecommerce sites experienced the biggest gains in venture capital funding, attracting USD4.46 billion or over 1000 percent more capital than in 1998. Venture capitalists were similarly drawn to B2B sites and the flow of capital to these sites grew by 908 percent. Access and infrastructure companies received 547 percent more venture capital funding than they did in 1998. Capital also flowed to software firms (USD6.6 billion), telcos (USD5.2 billion) and business services companies (USD4.6 billion). The latter sector was boosted by the mushrooming of Internet consultancies, website development and hosting firms and Internet advertising companies.

The survey clearly demonstrates the seachange in the US economy from heavy industry and manufacturing to technology and services.

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