VCs once again give loving to US start-ups

Venture capital investments in US businesses are on the rise, as they are in the UK and the rest of Europe. Start-ups and early stage companies, in particular, are getting love from investors for the first time in years.

A total of $5.6bn was invested in 761 businesses in the first quarter of 2004, the largest amount in two years, according a survey conducted by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.

Thirty per cent of the companies funded were in the early stage of development, the highest percentage since the first quarter of 2001. They accounted for 21 per cent of the total funds handed out.

Companies receiving their first VC round made up 27 per cent of the total number of firms funded and accounted for 21 per cent of the quarter's VC money, the most since 2002.

Tracy Lefteroff, global managing partner at PricewaterhouseCoopers, described the recent investment levels as "realistic, not exuberant".

Software maintained its place as the most popular sector to invest in, with $1.2bn worth of investments, more than the previous quarter. The networking industry also saw a quarterly bump to $459m of VC. Meanwhile, telecommunications garnered $518m, a decline from the first quarter of 2004.