U.S. Venture Investment Continues Growth

Investment in U.S. venture-backed companies reached $5.1 billion in the first quarter of 2004, continuing an encouraging trend of quarter-on- quarter growth since the first quarter of 2003, according to the Quarterly Venture Capital Report released by Ernst & Young and VentureOne, a service of Dow Jones. Larger deal sizes pushed the total dollars invested up 5% to the highest amount in almost two years. However, the number of transactions dropped 15% from 549 deals in the fourth quarter of 2003 to 465 deals this quarter. The decline is consistent with annual trends; the first quarter of the year is an administratively focused period for many venture capital firms.

The biopharmaceutical segment attracted its largest infusion of venture capital spending ever, with $1.5 billion invested in 57 deals, noted John Gabbert, Vice President of Worldwide Research for VentureOne. "The biopharmaceuticals segment is really the new bellwether for the VC industry as a whole. Half of the largest deals this quarter were for biopharmaceutical companies," Mr. Gabbert said. "In fact, this segment attracted 29% of all investments this quarter, even though deals were slightly reduced from 4Q03.

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