IT Drives Venture Investments in U.S.

Information technology companies received the bulk of venture capital deals in the United States and more than half the dollars during the first quarter this year, in a venture capital market that is growing, according to a new report published Monday by VentureOne, a unit of Dow Jones and Company and Ernst & Young.

Of the 564 venture capital investments in the United States amounting to US$6.02 billion during the quarter, 327 and $3.36 billion went to information technology companies, the research found.

The overall dollar figure of venture capital investments is up 18 percent over the same quarter a year ago, but the number of total deals is up only 6 percent. That suggests that investors are choosing fewer companies but investing larger amounts, say the study’s authors.

The largest deal that the researchers found during the quarter was a $150 million second-round investment in Amp’d Mobile, a mobile service provider that doesn’t own its own network but resells service from other operators.

Overall, more than half of the value of all the investments went to later-stage financings, and about 30 percent of the deals and 21 percent of the capital went to early stage investments.

The San Francisco area continued to attract the most money, but the number of deals made there dropped by five from the same period last year. The amount invested, however, grew by 5 percent to $1.92 billion during the quarter, the study found.

The New England region attracted five more deals than it did last year and 28 percent more capital, amassing $1.03 billion in investments.

Southern California and Washington state also had notable increases, with Washington attracting almost double the number of investments and more than triple the dollar amount.

-Nancy Gohring, IDG News Service

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