Venture capital investment retrenched to the lowest level since 1997 during the first quarter of 2009. VCs invested just $3.0 billion in 549 deals in the first quarter of 2009, according to the MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association.
Quarterly investment activity was down 47 percent in dollars and 37 percent in deals from the fourth quarter of 2008 when $5.7 billion was invested in 866 deals. The quarter, which saw double digit declines in every major industry sector, marks the lowest venture investment level since 1997.
Don't look to VC backed deals to be the engine that leads us out this recession. The biggest drop in deal flow was for venture receiving first-time financing.
This is bad news. We need VC's to start lending money. I have connections with VC's who have really cut back their spending because they have lost a lot lately. This is not good for everyone.