Economic Recovery Not Far Way

by Elias Shams
As a serial entrepreneur, I’m excited to share some data I just read on Dow Jones. Looks to me  economic recovery – in particular in tech sector, is not that far way. As private equity investment has been going down, venture capital funding has been going up:

Throughout 2009, funds for early-stage companies and multi-stage funds saw significant growth — optimistic signs heralding the return of venture capital. Funds fluctuated from quarter to quarter last year, but the year still ended strongly and Q1 2010 is robust compared to the beginning of last year.

Not only are VCs’ funds being up, they’ve also been busy making more deals than they were in previous quarters. Globally, 919 venture capital deals were inked in Q1 2010. These investments totaled $7 billion. The U.S. market accounted for the majority of both deals made (65% of the worldwide total) and dollars invested (67%).

The data shows that in the U.S., tech deals account for more of the total than other types of investments, and that the trend toward smaller, more cautious dollar amounts for financing rounds continues.

Tech investments in the U.S. grew YOY from $1.3 billion to $1.5 billion, making the U.S. far and away the largest source of VC for tech companies.
Overall, tech investments account for more investment dollars than any other type of investment. This year, tech investments rose to surpass healthcare investments, which had previously garnered more venture capital than any other category (amounts shown in millions):
I’m all for startups getting the most support they can. They’re what make our economy run and differentiate the US economy and citizenry from all others. That said, there is something to be said for going it in a down economy. I think companies are too quick to raise money and when it’s not available it forces better micro fiscal responsibility.