VCs Put Tech Dollars Into Software And Services - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
Business & Finance
News
10/31/2003
06:18 PM
50%
50%

VCs Put Tech Dollars Into Software And Services

What doesn't kill you makes you, at the very least, more careful. As a group, IT venture capitalists are a good example. U.S. venture-capital firms' investments dipped slightly in the third quarter, to $4.2 billion, according to the MoneyTree Survey conducted by PricewaterhouseCoopers, Thomson Venture Capital, and the National Venture Capital Association. After falling from a peak of $28.6 billion in the first quarter of 2000, VC spending has ranged between $4 billion and $4.6 billion for each of the past five quarters. For only the second time since 1997, software dropped to second place among industries drawing VC funds. Software companies received $819 million, down 11% from the previous quarter, making biotechnology the No. 1 draw.

Where The Money GoesEntrepreneurs with technology that helps business technologists maximize previous IT investments are enjoying the most interest from VCs. Accel Partners' Peter Fenton says software tools for monitoring, visualization, resource scheduling, and data recovery are getting more important as CIOs deploy cheap, scalable Linux and blade servers. And as companies look to install Web-services apps to connect customers and partners, there will be a greater need for management and security software.

According to the quarterly Ernst & Young/VentureOne Venture Capital Survey, the amount of money VCs have pumped into IT firms has declined for the fourteenth straight quarter. VCs invested nearly $1.98 billion in IT firms during the third quarter, down from $2.30 billion in the second quarter and $2.93 billion a year earlier. One bright spot: Information services companies saw investments more than double, to $186.9 million, up from $74.6 million in the second quarter and $85.8 million in the third quarter last year. But, as VentureOne manager for research operations Amity Wall notes, information services represents a small fraction of overall IT investments.

VC firms are heartened by the strength of the Nasdaq exchange, which posted an overall one-year return of 10.8% for the second quarter. Most venture-backed U.S. companies go public on the Nasdaq or are bought by companies listed there. The rise in share valuation for Nasdaq-listed firms gives them the currency for buyouts.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
2020 State of DevOps Report
2020 State of DevOps Report
Download this report today to learn more about the key tools and technologies being utilized, and how organizations deal with the cultural and process changes that DevOps brings. The report also examines the barriers organizations face, as well as the rewards from DevOps including faster application delivery, higher quality products, and quicker recovery from errors in production.
News
How to Create a Successful AI Program
Jessica Davis, Senior Editor, Enterprise Apps,  10/14/2020
News
Think Like a Chief Innovation Officer and Get Work Done
Joao-Pierre S. Ruth, Senior Writer,  10/13/2020
Slideshows
10 Trends Accelerating Edge Computing
Cynthia Harvey, Freelance Journalist, InformationWeek,  10/8/2020
Register for InformationWeek Newsletters
Video
Current Issue
[Special Report] Edge Computing: An IT Platform for the New Enterprise
Edge computing is poised to make a major splash within the next generation of corporate IT architectures. Here's what you need to know!
White Papers
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll