According to the quarterly Money Tree report released over the weekend, venture capital investing totaled about $7.1 billion in the first quarter. This is a decline from both the $7.8 billion raised in the fourth quarter and the $7.5 billion raised in the same period last year.
The decline in VC investing comes against a backdrop of continuing signs of an economic slowdown brought on by the global credit crunch and woes in the subprime mortgage market.
The slowdown has all but shut down the market for initial public offerings as well as mergers and acquisitions, the two most common avenues used by VC firms to cash in on their investments.
In a conference call, venture capital experts attempted to put a positive spin on the data, noting that investment activity still remains relatively high compared to the drop-off that occurred following the last economic slowdown in 2001.
"We see from an early stage investing point of view, the economic slowdown has had an impact and perhaps people are being mindful of the economic slowdown," Nina Saberi, managing general partner of Castile Ventures said on the call. "But, at the same time, the effects of it are milder than you might imagine from listening to the evening news."
John Taylor, vice president of research for the National Venture Capital Association, said VCs remain interested in new projects "albeit with a sense of caution."
Early-stage decline
As in previous slowdowns, venture capitalists seem to prefer companies were they already have established relationships -- or made previous investments.
Companies that have not received venture capital funding in the past saw a decline in activity during the first quarter. First-stage financings totaled $1.64 billion during the quarter, down 27% from the $2.24 billion in first-time deals in the fourth quarter and down 4% from the $1.7 billion in first time deals for the first quarter of last year.
"In the case of 2008 first quarter, 294 business plans were accepted and those companies were given funding for the first time so the industry is still taking on new projects and it's consistent with what we've done in recent quarters," Taylor of the NVCA said.
Early-stage investments totaled $1.66 billion for the first quarter, down 17% from the fourth quarter. Early-stage investing activity accounted for 23% of all VC activity for the recent period compared to 26% in the previous period.
Mixed bag for clean tech
The biotechnology and software sectors accounted for the largest share of venture capital dollars in the first quarter.
Biotechnology firms raised $1.27 billion in funding during the period -- largely flat with the sector's performance during the previous period. Software firms raised $1.26 billion during the quarter compared t0 $1.39 billion in the previous quarter.
The report noted that investments in the clean-tech area, which includes several of the formal industry sectors -- also saw a decline in the first quarter.
Clean-tech investments totaled $625 million for the first quarter, down 6% from the fourth quarter.
However, clean tech also accounted for some of the largest deals in the quarter. Range Fuels Inc., an ethanol production firm in Broomfield, Colo., raised more than $130 million in financing during the quarter, making it the largest VC deal for the period.
Suniva Inc., a maker of solar-cell technology from Atlanta, raised $50 million during the quarter. Another solar-power firm, Infinia Corp. of Kennewick, Wash., raised nearly $50 million during the period.
Every Friday on my 'Call-Out' segment a new fighter finds himself in the 'fishbowl', as we dissect the pro's and con's as they relate to him and his name in the sport. This week is no different, as we closely analyze the good and not-so-good relative to Phillipino phenom,
Manny Pacquiao. His talent and desire once he's in the ring can never be questioned, but the effort it takes to get him to that point - particularly lately - has left many wondering how much longer can he last atop his division, let alone remain a contender in a quest for the sports Pound for Pound elite mantle. Like always, we take a look at both sides of the spectrum, and when the facts are sorted out, we let you decide....
Pro-Pacquiao Perspective: Manny Pacquiao is by far the most fiery figure in the sport today. Few have the ability to perform under the lights of Vegas the way he has.
. From very early in his career those who saw him knew that he would eventually catch fire and become an international phenom, but the way that he has risen to global stardom was perhaps something that not even he could have dreamt of. It seems that every year Pacquiao finds himself centerstage in the midst of another mega-fight, typically against a solid Mexican counterpart that has no plans of letting his countrymen down. His hard-fought success against these Mexican greats over the last half decade or so have contributed to the often used nickname 'Mexican Assassin', and considering that he stands a solid 5-1 against them, few could counter this argument effectively. The thing about Pacquiao that stands out the most to
boxing enthusiast is the fact that he has found great success, yet he isn't the prototypical boxer. He simply comes to fight with no special effects. No slickness, no out of the ordinary movement, just the basic 'jab-counterpunch-cross' type style that comes highly equipped with an ability to take as good of a punch as the few he'll inevitably land. Ripping combinations, good speed, and a sheer desire to mix it up has made him a fan fave among boxing fans throughout the world. The fact that he sings and has dipped a hand in the world of politics in his native country have only helped him build a legendary status seen by many around the boxing world as impenetrable....Or so it would seem until now.
Anti-Pacquiao Perspective: Despite all of the demonstrative ring efforts and actions in the world of Manny Pacquiao, it's the lack of action away from the ring that has some fight fans openly questioning whether or not Pacquiao's name will indeed remain among the sports elite. In many ways Pacquiao has become a pop phenom, receiving accolades and attention that rival that of a boy band, and his response to such attention has caused a relative lack thereof at times which appears to be close to haunting him. It has become a mere pre-fight ritual to hear media rumblings about trainer Freddie Roach and promoter Bob Arum finding themselves on a wild goose chase, seeking the talented fighter down to shake him up and get him on the training trail. All of the past episodes of him suddenly headed back to the Phillipines in the middle of training for an upcoming fight, or him failing to remain focused in preparation for upcoming fights have hit been well documented and have some fans openly stating that his demise could very well be in the cards for the near future. There was a time when these conversations were just talk, but lately, the mental lapses have become more of a reality as Pacquiao has come into the ring with these issues evidenced. A great example of this is the fact that he has not been able to adequately keep his non-fighting weight down, which has resulted in him starving himself to make his previous fight weight of 130lbs. In his last fight, he entered the ring on fight night 17 lbs heavier than he weighed the previous day at the official weigh-in. His sluggish performance allowed him to narrowly escape with a victory, but that victory was widely contested, and in many ways, legitimately a loss. Moving up in weight has now been viewed as more of a necessary evil, due to the fact that Pacquiao's current workout dedication hasn't allowed him to maintain his normal standard. Not since "Iron"
Mike Tyson has the sport seen such a celebrated figure have such a perceived total collapse in their approach and dedication to the sport. This type of recent non-chalant approach by Pacquiao could very well result the same way if Arum and Roach don't find a way to harness that energy into more commited production.
Final Analysis: The truth of this matter as I see it is the fact that Pacquiao has far too much talent to let it slide the way it has, and if he isn't careful, the result could very well be catastrophic in the end. He's gotten away for the longest time by binging into the celebrity lifestyle and working at his own pace, but his most recent fight against Marquez was tangible proof that his days as a perennial figure in the sport could are numbered if he can't find a way to recommit himself and show the kind of dedication that initially got him there. When you look at naturally smaller fighters like Ricky Hatton who have great talent but a frame that isn't designed to accomodate too much more weight, it's quick to realize that the cap on their potential as it relates to fights above their natural weight is a very real one. Marquez appeared to have Pacquiao a bit dazed in various spots of their last fight, and his power doesn't quite rival some of the future opponents on Pacquiao's radar. Hatton and Dela Hoya have both been considered, and in the end, Pacquiao's recent approach to his craft wouldn't allow him to slide by either man without kissing the canvas at some point, if not for good in a given fight scenario. Diaz is the next scheduled assignment, and it won't be an easy one. If Pacquiao doesn't look good against for the second fight in a row, things really get a bit testy. Personally, I think it's just a matter of time before the invincible shield of Pac-Man disappears. Granted, that's only my opinion, but for some odd reason I think it could represent a suddenly not so silent majority. Now that the analysis has been been completed and we've seen both sides, it's time to chime, which means that before Pacquiao gets his say, you decide.
