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US venture capital investment sags

Article Date:  May 18 2009

Data from the US shows an accelerated decline in the value of equity investment into venture capital (VC)-backed companies.

VC investment in the first quarter of the year was $3.0 billion (£2.0 billion), a fall of 47 per cent on the $5.7 billion invested in the previous quarter. On a year-on-year basis, investment plunged 61 per cent.

The study from business advisory firm Pricewaterhouse Coopers demonstrates that the quarter-on-quarter decline has accelerated from the 22 per cent drop reported between the third and fourth quarters of 2008.

The software sector attracted the most funding between January and March ($614 million), followed by biotech ($577 million). Both saw investment decline by more than 40 per cent on the previous quarter.

An even sharper fall was seen in cleantech, where $154 million was invested representing a fall of 84 per cent on the last quarter of 2008. This was the lowest level of inevstment for the sector since 2005.

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