Dot-com squeeeze looks set to continue

PricewaterhouseCoopers (PWC) has revealed that funding for venture capital-backed companies continued to fall during the third quarter. Funding fell 22% from $8.37 billion in the second quarter to $6.49 billion.

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By  Zoe Moleshead Published  November 5, 2001

With dot-coms continuing to fall by the wayside a recent PricewaterhouseCoopers (PWC) survey, revealing that funding for venture capital-backed companies had continued to fall during the third quarter, isn’t likely to offer any great hope of an imminent recovery.

PWC’s MoneyTree survey, in conjunction with VentureOne, discovered a 22% drop in venture capital investment from the second quarter. Although investment topped $6.49 billion in the third quarter, this was down from the $8.37 billion spent during the previous quarter, and a massive 71% drop from the third quarter last year.

“Clearly, fewer companies are able to raise money, and those that are able to raise money, raise less,” said Dave Witherow, president, VentureOne.

Average funding from initial seeding rounds was slashed by a third between the second and third quarters, falling from $1.5 million to just $500,000.

The only bright spot on the horizon is the communications sector, which managed to stem its losses from a 38% decrease in the second quarter to 17% fall in the third quarter. Communication ventures managed to draw in $1.58 billion down from $1.9 billion the previous quarter.

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