Total venture capital investments reached an all-time high of $12.5bn in 1998, according to VentureOne Corp, a research firm that specializes in information and analysis on the VC market. That total represents a 12.5% increase from 1997’s $11.2bn. The firm said that 1,824 transactions were completed in 1998 compared to 1,821 in 1997, but a significant number of larger deals made the difference. The IT industry remained the strongest component of investment growth for the year, accounting for over 60% of the financings, and 62% of the dollars invested. IT companies raised a total of $7.7bn in 1,102 completed transactions. By contrast, healthcare companies raised $2.7bn in 404 deals and the retail and consumer/business products and services sector bagged just under $1.8bn in 249 deals. The strength of the IT sector was fueled largely by investments in communications and information services companies; with eight of the ten largest deals of the year falling in the communications arena and the other two were in information services. New Enterprise Associates was the most active investor of 1998, with 64 deals, according to VentureOne, with Kleiner Perkins Caufield & Byers second with 54 deals. The IPO market for venture-backed companies declined slightly last year, with a total of $4.2bn raised by 77 companies going public, down from $5.4bn raised by 135 companies the previous year. Venture-backed IPOs accounted for 20% of all IPOs last year, down from 26% in 1997. Internet companies led the pack, accounting for over 30% of all venture-backed companies going public – up from just 12% for 1997. While the overall venture-backed IPO market was down for the year, the companies that went public did so at record valuations, VentureOne says, and the time to IPO decreased to just over three years from the previous averages of more than six years. In the area of mergers & acquisitions, venture-backed companies were involved in 209 deals that saw more than $29bn change hands, up from $26.9bn in 109 transactions a year ago.
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