Skip to Content

Gloom Lifts for Venture Capital

After two dismal years, money is starting to flow for the next batch of startups.
April 1, 2004

The past two years have been brutal for emerging technology companies seeking venture capital investments. But that’s changing. Following a burst of initial public offerings late last year, venture capitalists are already loosening up their purse strings for the next batch of startups.

In the fourth quarter of 2003, venture capital firms raised $5.2 billion, almost half of what they raised in all of 2003. During the same period in 2002, they raised just $2.1 billion. And there are some clear indications about where venture investors are looking to spend their money. “There still seems to be a tremendous amount of interest in the wireless sector, in enterprise security applications and consumer electronics products,” says Kenneth Lawler, a general partner at Battery Ventures in San Mateo, CA.

The renewed interest in venture capital is partially fueled by signs that opportunities for lucrative public offerings are returning. Although just 29 venture-backed companies went public in all of 2003-a paltry number by historical standards-17 of those were in the fourth quarter and raised $1.05 billion, an average of $61.7 million per offering. The largest contribution to these fourth-quarter IPOs came from the medical and health-care sector, with five companies, followed by consumer products and services with three. Still, experts are cautious. “The [initial public offering] market is still very challenging. It’s not as if any kind of floodgate has opened here,” says John Gabbert, vice president of research at VentureOne, a San Francisco-based venture research firm.

Whether the momentum in the venture market will hold up is anyone’s guess. But at least some rays of hope are penetrating the gloom.

Keep Reading

Most Popular

Death and Jeff Bezos
Death and Jeff Bezos

Meet Altos Labs, Silicon Valley’s latest wild bet on living forever

Funders of a deep-pocketed new "rejuvenation" startup are said to include Jeff Bezos and Yuri Milner.

tonga eruption
tonga eruption

Tonga’s volcano blast cut it off from the world. Here’s what it will take to get it reconnected.

The world is anxiously awaiting news from the island—but on top of the physical destruction, the eruption has disconnected it from the internet.

mouse engineered to grow human hair
mouse engineered to grow human hair

Going bald? Lab-grown hair cells could be on the way

These biotech companies are reprogramming cells to treat baldness, but it’s still early days.

conceptual illustration showing various women's faces being scanned
conceptual illustration showing various women's faces being scanned

A horrifying new AI app swaps women into porn videos with a click

Deepfake researchers have long feared the day this would arrive.

Stay connected

Illustration by Rose WongIllustration by Rose Wong

Get the latest updates from
MIT Technology Review

Discover special offers, top stories, upcoming events, and more.

Thank you for submitting your email!

Explore more newsletters

It looks like something went wrong.

We’re having trouble saving your preferences. Try refreshing this page and updating them one more time. If you continue to get this message, reach out to us at customer-service@technologyreview.com with a list of newsletters you’d like to receive.