In a few short months Silicon Valley has gone from paramour to pariah in the opinion of US venture capitalists. A new survey reveals that investment in the region plummeted 66 per cent from $9.28bn in the second quarter last year to $3.14bn this year.
Although Silicon Valley remained the leading region in the US for investment in the second quarter, its share of total dollars invested decreased from 34 per cent a year ago to 29.5 per cent, according to the survey from the National Venture Capital Association (NVCA) and financial information company Venture Economics.
The NVCA believes that the regional decrease follows the waning interest which venture capitalists now have in the internet and ecommerce sectors. This interest may indeed be waning but, nationwide, it is still the leading sector for investment.
Venture capitalists poured $3bn into the sector in the second quarter, which represented 28.4 per cent of the overall $10.6bn invested in all sectors in the three months ending 30 June.
In the first quarter 34.3 per cent went to the internet sector. In the second quarter last year the percentage was a huge 48 points.
So what's hot now? According to survey it's back to bio-technology, which was the darling of the 1980s.
"The increased focus on the life sciences industry, where it can take several years to develop a product, shows that venture firms are getting comfortable again with long gestation periods for their investments," said Adam Reinebach, vice president at Venture Economics.
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