NEW YORK -“The sky is not falling, but the weather has changed,” said Kirk Walden, national director of PricewaterhouseCoopers MoneyTree Survey.
Venture-capital investments in American companies involved in wireless and wireline communications weathered the last quarter of 2000 well, especially considering the changed conditions. In the sector, 209 companies received a total of $4.833 billion, according to the survey, which is the first collaboration in PWC’s new partnership with VentureOne Corp.
The number of telecom/wireless companies receiving venture financing set a record for the five-year period in which the MoneyTree Survey has been conducted. Both the number of investments last quarter and the aggregate dollar value of those investments were well ahead of the same period of 1999 when 169 companies obtained a total of $3.728 billion.
By total number of dollars invested in the sector, the second quarter of 2000 marked the all-time high, with $5.93 billion in venture backing. The third quarter of last year came in second, with a tally of $5.159 billion.
For the full year, telecom/wireless companies fared far better in the number of deals and their dollar total than they had in any of the prior four years of the MoneyTree Survey.
Last quarter, each of the 209 companies in the sector received an average investment of $23.12 million, a 5-percent increase from the same period a year earlier, Walden said.
Early stage ventures, those receiving seed or first-round capital, accounted for 56 percent of the companies receiving funding but about 30 percent of the dollars invested.
“Although the total dollars invested in telecom/wireless companies has declined from the third quarter, the number of formative stage companies receiving funding has remained strong. This reflects the venture capitalists’ continued confidence in investing in new companies in this sector,” Walden said.
Calient Networks, San Jose, Calif., a fiber optics and photonics developer, received the largest commitment in the telecom/wireless sector last quarter, $195 million in third-round financing.
In addition to fiber optics and photonics, “significant investments were made in communications software, telecommunications service providers, connectivity products and wireless service providers,” Walden said.
Among wireless companies, Formus Communications, a Denver-based provider of broadband services in Europe, received the largest venture-backed investment last quarter, $76 million in late-stage funding.
Across all industry sectors, 2000 was a record year, with total investment reaching $68.8 billion, an 80 percent increase over 1999.
“Perspective is important here. Despite the `dot-bombs’ of 2000 and despite the turmoil in the pubic markets, venture capital investments were the highest in history,” said Tracy T. Lefteroff, global managing partner of the PWC Venture Capital Practice.
“The quarter-to-quarter declines indicate that venture investing is settling toward a new plateau-a plateau that will be far above historical norms.”
More information about the survey can be obtained from the PWC Global Technology Industry Group Web site at www.pwcglobaltech.com.
