Venture investments highest since 2001

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NEW YORK (AP) — Funding for U.S. startup companies soared
57 percent in the first quarter to a level not seen since 2001, as
venture capitalists piled more money into a growing number of deals,
according to a report due out Friday.
Startup investments totaled
$9.47 billion in the first three months of the year, up from $6.01
billion in the first quarter of 2013. It was the highest since the
second quarter of 2001, when investments reached $11.5 billion.
There were 951 deals completed in the quarter, up from 916 in the same period a year ago.
Software
companies received the most money — $4 billion. Biotech was a distant
second with $1.06 billion. The last time the software sector received
this much money was in the fourth quarter of 2000, right as the dot-com
bubble was about to burst.
The sharp increase in venture funding
in the first three months of the year comes amid a cooling of investor
sentiment toward publicly traded technology stocks. Since March, shares
of companies such as Netflix, Twitter and Facebook have sagged. With
some technology stocks down as much as 40 percent, as in Twitter’s case,
the sharp decline is raising questions about whether the downturn is
temporary or a sign that another bubble is about to pop.
That
said, one reason for the high level of funding activity may be that VCs
are investing in maturing companies. Later-stage deals are bigger than
early-stage investments because they help startups expand rather than
get off the ground.
Online storage startup Dropbox snagged the
quarter’s top deal with $325 million. It was the San Francisco company’s
fourth round of financing. Vacation rentals site Airbnb and mobile
messaging service TangoMe tied for the No. 2 spot with $200 million
each. For Airbnb, it was the seventh round of financing, while it was
TangoMe’s fourth.
The MoneyTree study was conducted by
PricewaterhouseCoopers and the National Venture Capital Association,
based on data from Thomson Reuters.
Copyright 2014 The Associated Press. All rights
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