$18 bln of venture investments in 2003

Venture capital ended the year on an up note in Q4 2003 with investments totaling $4.9 billion in 679 companies according to the PricewaterhouseCoopers/Thomson Venture Economics/National Venture Capital Association MoneyTree Survey. This figure is up from $4.4 billion in the third quarter of 2003, and is the highest amount invested since the second quarter of 2002 when the total reached $6.0 billion. Investment in Life Sciences companies continued to outpace other industry sectors. For full year 2003, investments totaled $18.2 billion in 2,715 companies. The 15% decline from 2002’s $21.4 billion was small compared to decreases over the last three years indicating that venture capital is settling out at a comfortable, sustainable level. The relatively consistent levels of quarterly investing throughout 2003 further support this assessment.

Biotechnology’s momentum continued in the fourth quarter with $1.1 billion of investment. For the second consecutive quarter and only the second time in the past eight years, Biotechnology was the leading industry category, outpacing Software, which accounted for $978 million in the quarter. For full year 2003, the Life Sciences Sector (Biotechnology and Medical Devices, together) attracted $4.89 billion, or 27% of all venture capital. This represented the highest proportion directed to Life Sciences in the last 12 years. The largest single-industry category was Software, capturing $3.6 billion over the full year. That figure amounted to 20% of all investing, well in line with historical norms for the category. It was followed closely by Biotechnology at $3.4 billion. The other two major industry categories both slipped slightly in 2003. Telecommunications fell to $2.0 billion or 11% of all investing. Networking dropped to $1.7 billion or 9% of the total in 2003. At their historical peaks, Telecommunications accounted for as much as 17% of all venture capital, and Networking accounted for 14%.

Semiconductor investing held steady at $1.2 billion, or 6% of 2003 investing. The remaining industry categories accounted for less than 5% each.