The paralysis gripping the venture capital industry continued in the third quarter as general partners remained cautious about investing in clean-technology and information-technology startups.
The quarter saw a retrenchment after a modest uptick in the second quarter raised hopes of an industry recovery. Instead, 2009 investments look on track to be the lowest since 2003.
According to Dow Jones VentureSource, 23 energy and utility companies raised just $415 million. The total was down 70 percent from the $1.4 billion raised in last year’s third quarter. However, it was up from exceptionally weak first and second quarters, suggesting a rebound could slowly be gathering momentum.
Companies developing renewable energy technology fared worse than the energy sector as a whole, with investment down 73 percent.
Clean tech companies weren’t the only ones to suffer. Information technology deals fell 39 percent in dollars and healthcare investing was off 25 percent.
“The current investment pace will likely persist right through 2010, as long as limited partners – the pension funds, university endowments and other suppliers of capital to venture firms – continue to scale back their commitment levels to venture funds,” said Scott Austin, editor of Dow Jones VentureWire.
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