Venture Capital Investing Plummets In The Fourth Quarter

Venture capital investing collapsed in the fourth quarter with spending on startups falling 45 percent from a year ago.

According to a report released Saturday morning, only 818 deals were done during the volatile three months and $5.4 billion invested, the lowest amount since the first quarter of 2005.

For all of 2008, VC’s placed $28.3 billion, 8 percent less than 2007 and the annual decline since 2003, said the report from the National Venture Capital Association, PricewaterhouseCoopers and Thomson Reuters.

The findings parallel a similar study released a week ago by Dow Jones VentureSource.

The reports suggest that as the financial crisis gripped Wall Street and corporate product demand began to unravel, VCs sharply slowed their activity in face of market uncertainty.

There are few signs of a dramatic reversal ahead.

The fourth-quarter dip hit most industries, from life sciences to software to Internet companies. In software, VCs funded the fewest number of companies since 1997. Internet investing fell 26 percent,

Even investments in clean-tech startups dropped 14 percent to $909 million. Sixty-two deals were funded.

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