(May-2003) Venture capital climbs out of the dip

Australian venture capital activity has bounced back after its post-tech wreck slump, a new report shows.

The report, compiled by the Australian Venture Capital Journal’s Victor Bivell, reveals that total capital invested by the formal Australian venture capital industry in the September 2002 quarter was $152.1 million and this almost doubled to $298.6 million in the December 2002 quarter.

“The September and December quarters continued the recovery from the dramatic plunge in activity in the March 2002 quarter when only $91.6 million was invested,” says Bivell.

“However, the level of activity is still less than half the all time high of $617.5 million in the December 2001 quarter.”

Total local venture capital investment in the six and a half years from the September quarter 1996 to the December quarter 2002 was $5.2 billion.

Bivell says the quarterly trend indicates that the level of investment has returned to that of the pre-technology boom and early technology boom period of the late 1990s.

“This is consistent with the investment patterns and level of activity being recorded internationally, particularly in the US. But the decline in Australia occurred two years after the decline in the US and has not been as severe,” he says.

“US venture capital investment had a sudden and long decline that continued into the December quarter 2002. The Australian decline was short, appears to have stabilised, and is showing signs of recovery,” the report states.