Venture capitalists invested just $3.90 billion in U.S. companies in the quarter, a 50% decline from the nearly $7.78 billion invested over the same period in 2008 and the lowest quarterly investment total since 1998, according to a new report from Dow Jones VentureSource . The study found that only 477 venture deals were completed in the quarter, well below the 706 deals done in the first quarter last year and the industry’s lowest quarterly deal total since 1996.
Some other key findings from Dow Jones VentureSource:
- The software sector saw $728 million invested in 117 deals during the quarter, a 50% decline from the same period last year when nearly $1.46 billion was invested in 163 deals. This marks the lowest quarterly investment in software since 1997 and the sector’s smallest deal count since 1995.
- The information services sector, which includes most Web 2.0 technologies, saw investment and deal flow fall back to the levels seen in 2005. Information services companies attracted $323 million in 55 deals during the first quarter, down more than 61% from the record $828 million invested in 116 such deals a year ago.
- Later-stage financing rounds accounted for 55% of all venture investment in the first quarter of 2009, up from 47% in the same quarter last year. By comparison, the proportion of seed and first-round investment was just 18% in the first quarter, down from 25% in the same quarter last year.
- The San Francisco Bay Area attracted the majority of capital, but saw investment fall 57% to $1.14 billion with 139 deals complete–the region’s lowest investment and deal totals in at least a decade.
- New England garnered $594 million in 61 deals, nearly 16% less than what the region saw invested in the first quarter of 2008.
- Southern California saw investment drop 35% year-over-year to $462 million with 58 deal completed in the first quarter of 2009.
- The New York Metro region attracted $390 million in 46 completed deals, 40% off from a year ago when $655 million went to start-ups in the region.
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