Venture capital investment surges

(August 17, 2004) Venture capital continued to pick up steam in the second quarter of the year, as the industry invested $375 million, a year-over-year gain of 48%, according to data released by Canada’s Venture Capital and Private Equity Association (CVCA) CVCA and research partner Macdonald & Associates.

“These second quarter numbers build upon the positive results of the first quarter and provide grounds for optimism for the remainder of 2004,” said Dr. Robin Louis, president of CVCA. “Investment levels are up in both the first and second quarters of 2004 relative to the comparable periods last year.”

Information technology investments accounted for the majority of disbursements, at 54%. Non-technology industrial investments made up 29% of the total.

There is some concern, however, that the venture capital industry is not attracting enough capital, threatening its ability to fund worthwhile projects and potentially stifling innovation.

“The $317 million in new capital raised by venture capital firms, from both institutional and retail investors in the second quarter of 2004, is up from $162 million in the second quarter of 2003,” said Dr. Louis. “However it is less than the amount invested during the quarter so the overall amount of funds available for investment declined during the quarter.”

“We remain concerned about the continued low rate of capital raised by the venture capital industry,” said Dr. Louis.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com