VC hi-tech investments down 10% in Q1

Capital raised by Chiaro, Mellanox, Atrica accounted for 50% of investment volume

Author:: TheMarker.com Staff
Publish date:: Apr 21, 2002 9:23 AM EDT

Hi-tech investments by venture capital funds dropped 10% to $344 million in the first quarter of this year, compared with $384 million in the fourth quarter of 2001, according to the quarterly Money Tree survey conducted by Kesselman & Kesselman PricewaterhouseCoopers.

Seventy-four VC firms participated in the survey.

Kesselman & Kesselman PricewaterhouseCoopers Hi-Tech Senior Partner Joseph Fellus said that the drop would have been much bigger were it not for huge financing rounds by Chiaro Networks, Mellanox Technologies, and Atrica, which accounted for half of total investments.

In addition to the decreased volume of investments in financial terms, there was a sharper drop of 28% in the number of companies that attracted investments, 76 companies in all, compared with 106 companies in the last quarter of 2001, Fellus said. This comes to a 42% drop, compared with the first quarter of 2001, when 132 companies attracted investments.

The average investment in the first quarter of 2002 comes to $4.5 million, 25% more than in the fourth quarter in 2001, when the average investment came to $3.6 million. The upward trend evident in the last two quarters reflects VC funds focus on later financing rounds.

This is the fifth year that Kesselman & Kesselman PricewaterhouseCoopers has published the Money Tree survey, parallel to the United States and Europe survey published by leading global accounting and consultancy firm PricewaterhouseCoopers.