U.S.-based venture capital investments reached their highest point last year
since 2001, with software remaining the strongest category, according to The
MoneyTree Report, released this week by PricewaterhouseCoopers and the National
Venture Capital Association (NVCA).

VC firms sunk some US$29.4 billion into 3,813 U.S. deals in 2007, according
to the report.

Software-related VC funding once again received the most funding, with $5.3
billion, compared to $5.1 billion in 2006, according to the report, which used
data from Thomson Financial.

VC spending on other technology categories also rose. Funding for computer-
and peripheral-based interests was $580 million, up from $497 million in 2006;
IT services, $1.3 billion, compared to $1.1 billion in 2006; networking and
equipment, $1.25 billion, compared to $1.1 billion the previous year.

However, semiconductor VC investment fell to $1.85 billion, from $2.14 billion
in 2006. Telecommunication also saw a slowdown, falling to $2.14 billion, compared
to $2.6 billion in 2006.

While the VC market has hardly bounced back from its boom year -- 2000, when
spending stood at $105 billion according to NVCA -- it has slowly crawled back
to life. A low point came in 2003, when VC investments were a mere $19.7 billion,
NVCA data shows.

Major software vendors employ varying strategies toward the VC market. While
some companies, notably Sun Microsystems, infuse cash into startup companies
through funds of their own, others such as IBM take a different tack, working
with VC firms to analyze their portfolios and spot companies that could be potential
future partners.

"We're not in the venture investment business," said Claudia Fan
Munce, managing director of IBM's venture capital group and vice president of
corporate strategy.

"The due diligence process today is much, much heavier," Munce remarked
of the current climate. But as the report's numbers indicate, venture investing
is far from dead. "They're coming back in a very different way. They're
not just looking at Silicon Valley," Munce said.

According to the study released this week, U.S.-based VCs invested $1.1 billion
in India and $1.4 billion in China, record highs for U.S. investments in those
nations (The numbers are not included in the study's aggregate totals, according
to PricewaterhouseCoopers.).

IDG News Service

• Email
• Print
• Share
  • Slashdot
  • Digg
  • Stumble
  • Reddit
  • Newsvine