Favourable economic conditions and ongoing Internet mania saw second quarter venture capital activity in the US reach $7.6 billion, more than double the amount invested in the same period last year.
According to the latest Pricewaterhousecoopers Moneytree survey, which monitors venture capitalist investment in private companies, backers invested $7.67 billion in 992 companies from April to June this year, an increase of 104 per cent on last year's total.
As much as 90 per cent of funds went to high technology companies operating in the bio-technology, communications, semiconductor, electronics, software and Internet industries, the report found.
Average funding per company was $7.4 million, up 57 per cent on the same period last year.
Kirk Walden, national director of venture capital research at Pricewaterhousecoopers in the US, said the second quarter had eclipsed the previous investment record of $4.31 billion, which was recorded in the first three months of this year.
"The magnitude is stunning," Walden said.
He attributed the massive surge in activity to a combination of excellent economic conditions and stable stock and IPO markets.
"All the pieces were in place for a wonderful second quarter," Walden said.
More normal results were expected in the third quarter, he said. "We expect it to come back down to a 'mere' $4 billion to 5 billion."
In the US, venture capital investment in technology companies has been growing massively year on year.
In 1997, the Moneytree study showed average venture capitalist investment at $2.5 billion to $3 billion a quarter, and in 1998, this rose to $3 billion to 3.5 billion.
This week the London Stock Exchange revealed plans to create a high tech index in the UK, with less requirements to list than the main exchange, to encourage the growth of technology companies in the UK and Europe. (see Newswire 26 August, 1999)
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