PRINT THIS PAGE US venture investment in Q2 slumps to pre-1998 levels30/07/2002. Source: AltAssets. 
 US venture capital investment in the second quarter fell 11 per cent from the previous period to $5.7bn, the lowest level since the third quarter of 1998, according to figures from Venture Economics, the National Venture Capital Association and PricewaterhouseCoopers. The results confirm the ongoing retreat in venture investing back towards pre-bubble levels.
Tracy Lefteroff, global managing director of the venture capital practice at PricewaterhouseCoopers, said the figures were less dispiriting when they were seen in a broader historical context than simply the last couple of years.
‘As expected, total investments for the year 2002 will be well below 1999, the first of the bubble years. However, 2002 is still likely to be the fourth largest year ever for venture investing' she said.
The well-documented decline was explained by general macroeconomic weakness, the volatility of public markets, and the dramatic fall in valuations since the peak of the TMT boom, she said.
On a mildly positive note, she noted that the number of new investments, as opposed to the value, had been fairly constant. ‘The fact that the number of companies getting venture backing has scarcely decreased is a positive indicator of future activity,' Lefteroff said.
Most sectors suffered a fall in investment in the second quarter, with the notable exception of life sciences. Investment in biotechnology and medical devices rose 15 per cent on the quarter to $958m compared with $836m in the first quarter. The life sciences sector as a whole was the second highest sub-sector and accounted for a record 27 per cent of all venture investing.
Software maintained its number one position by attracting around $1bn in investment, down 16 per cent on the previous quarter. All the other major sectors suffered falls.
The most popular stage in the second quarter was expansion, with 468 companies accounting for 66 per cent of total investment. There were 233 early stage companies accounting for 19 per cent of investment. The number of later stage companies funded in the second quarter fell to 73 from 132.
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