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Venture Capital Investment Still Low in the First Quarter of 2010

Wednesday, April 21, 2010 by Doron F. Eghbali

Venture capital investment rose in the first quarter of this year. However, the increase was near all-time low in past 10 years, according to Dow Jones Venture Source. Here are the breakdowns of some major categories.

INFORMATION TECHNOLOGY

This was the largest area of venture investment, this past quarter.
Funding increased to $1.53 billion from $1.33 billion last year.
However, the number of deals and the amount invested tumbled precipitously, as more information technology funding was diverted into clean technologies.
Still, there are signs venture capitalists are starting to regain confidence in information technology sector as entrepreneurs present revolutionary and breathtaking innovations.

HEALTH CARE

This sector was one of the worst performers in the first quarter.
This is interesting to note last year health care even outperformed information technology.
Venture capitalists attribute such reversal of fortunes to increasingly complex regulatory environment.
Another reason for reversal of fortunes was low valuation of health care companies and the election of those companies to sustain on their available funding rather than raise capital on low valuations.
Only $1.71 billion was invested in the last quarter in 141 financings.

RENEWABLE ENERGY

Renewable energy sector showed signs of revitalization in the first quarter.
Firms invested $338 million into 25 financing rounds.
However, this amount could not be compared to $466 million investment into 21 financing rounds for the first quarter of 2008.

BOTTOM LINE

Unfortunately, venture capital firms still invest very cautiously in new ventures and instead elect to invest in ventures with proven track record where they could secure high returns with relatively little risk.

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DORON EGHBALI is a Partner at the Beverly Hills Offices of Law Advocate Group, LLP. He Primarily Practices Business, Real Estate and Entertainment Law. Doron Can Be Reached at: 310-651-3065. For More Information, Please, Visit: HERE.

Posted at 11:10 AM

Topic: Banking Law