Last year was another banner year for US start ups as they attracted $14.27 billion in venture capital (VC) funding, up 24 per cent or $2.78 billion on 1997's previous record levels. The technology market as defined in the latest Money Tree survey by PriceWaterhouse/Coopers (PwC) includes IT, communications and biotech, which garnered 76 per cent or $10.8 billion of the total in 1998. In 1996, technology accounted for $5.5 billion and in 1997, $8.3 billion.
Unsurprisingly, Silicon Valley was the place to be for would be entrepreneurs and hi tech start ups. A total of 786 received funding last year compared with only 351 back in 1995, indicating the region?s status as a Mecca for start ups, attracting companies with antecedents in Europe, Asia and Australasia.
This year, Silicon Valley companies attracted an average of $5.8 million each, bringing the total to $4.55 billion, a 29 per cent or $1 billion improvement on 1997.
James Atwell, the PwC partner in charge of the survey, said: "It looks like 1998 will be remembered as the 'Year of the Entrepreneur, and 1999 looks like it could be an even better year than 1998, as venture capital firms raise larger and larger funds, allowing them to make larger investments in the later stages of their portfolio companies' development."
The technology sector that saw the largest increase at 66 per cent was, unsurprisingly, Internet related. A total of $3.5 billion was poured into Internet related companies, surpassing previous highs of $2.1 billion in 1997 and $1.1 billion in 1996.
The software and information sector were next in line, boosting investment by 57 per cent to $4.5 billion, while funding for the communications market rose by 32 to $3.9 billion.
"Technology investments have nearly doubled in two years, while Internet related investments have tripled," said Atwell.
The success of firms such as Amazon.con and the online brokerages on Wall Street have led venture capitalists to start looking for the next big ecommerce business, which could result in a public flotation.
For example, VCs poured $30 million into InsWed.com, a company that provides customers with insurance quotes over the Internet, while 401kforum.com, which offers retirement planning advice, secured $15 million.
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