Disbursements Smash Quarterly Record

Whoosh!

According to numbers released by Venture Economics Information Services, the second quarter saw 958 companies receive $7.562 billion in financing.

The number of companies funded surpassed the fourth quarter of 1998, when 944 companies received venture investments, and the amount invested in these companies cruised easily past that quarter’s $5.109 billion. In fact, the $7.5 billion in 958 deals surpassed the $7.31 billion committed to 1,669 deals in the first half of 1998.

California-based ventures stayed far ahead of any other state, collecting more than $3 billion last quarter, while no other state topped the $1 billion plateau. Massachusetts’ $908 million retained second place for the state, while New York, Washington D.C. and Washington state rounded out the top five.

Sources of venture funding continues to diversify in the quarter. Private venture capital partnerships and partnerships affiliated with financial corporations committed $6.087 billion of the total, but corporate and individual investors made their presence felt by adding another $1.1 billion to the flow.

However, diversification of venture capital sources failed to lead to diversification of venture recipients.

More than half of the new record pace, $3.9 billion, fell into the hands of 393 companies engaged in Internet related business and services. Past favorite sectors health-care and biotechnology kept a steady pace garnering $494 million and $289 million in the quarter, versus $492 million and $232 million respectively in the first quarter.

The pace of disbursements has not left venture capitalists suddenly bereft of money however. Venture Economics also released fund raising numbers for the first half of the year, and while the pace is modestly behind the $26.2 billinon committed to venture funds last year, 112 venture firms have raised $10.4 billion in 1999 to reload for the second half.