ISLD mentioned in nice company (WITC, etc.)
VCs continue to break Internet investment records
By Georgie Raik-Allen
Red Herring Online
May 12, 1999
Five Internet companies raised more than $50 million
each in the first quarter of 1999, establishing another
record-breaking quarter for venture capital investment
in private Internet businesses.
Wit Capital raised $72 million,
Juno Online Services raised $65
million, NorthPoint
Communications raised $63.6
million, LookSmart raised $60
million, and Digital Island raised
$50 million.
According to statistics released
by venture capital research firm VentureOne, those
five Internet companies topped the list of all venture
deals for the quarter. However, those record-breaking
investments have already been overshadowed by
Zefer, a Boston-based Internet services startup that
just raised $100 million from Chicago-based
investment firm GTCR Golder Rauner.
Total venture investment in
Internet companies reached a
new height of $2.1 billion in the
first quarter of 1999, representing
58 percent of the quarter's total
venture investments and an
increase from $1.6 billion in
Internet investing in the fourth
quarter of 1998. In the usually
slow quarter, a record $3.6 billion
venture dollars was invested
overall in private companies, a
31.8 percent increase over the first quarter 1998 and a
10.5 percent increase from the fourth quarter 1998.
"The extraordinary volume of Internet investments has
made a normally slow quarter into a record-breaker,"
says Dave Witherow, CEO of VentureOne.
BIG DEALS
Most of the increase in dollars is attributable to a trend
of ballooning deal size rather than number of deals
closed. In the first quarter of this year, venture
capitalists inked 464 deals, representing an increase of
just 2.2 percent over the fourth quarter 1999.
Information technology startups accounted for 62.7
percent of deals, health care 17.3 percent, and
products and services companies 17.2 percent.
According to Jean Yaremchuk, vice president of
research and technology at VentureOne, the amount of
venture capital dollars going to health care is dropping,
with startups in that sector having to look elsewhere
for financing.
BIG EXITS
While 22 companies went public last quarter, raising
$1.5 billion on the markets, 36 companies merged or
were acquired for a total value of $5.5 billion.
The five biggest venture-backed IPOs for the first
quarter were Priceline.com (Nasdaq: PCLN), which
raised $160 million; Covad Communications (Nasdaq:
COVD), which raised $140 million; Critical Path
(Nasdaq: CPTH), which raised $108 million;
Packaged Ice (Nasdaq: ICED), which raised $91
million; and iVillage (Nasdaq: IVIL), which raked in
more than $87 million.
The largest venture-backed merger and acquisition
deals were WNP Communications, acquired by
Nextlink Communications (Nasdaq: NXLK) for $695
million; Lightera Networks, acquired by Ciena
(Nasdaq: CIEN) for $552 million; Omnia
Communications, also acquired by Ciena, for $429
million; Assured Access Technology, acquired by
Alcatel (NYSE: ALA) for $350 million; and Sqribe,
acquired by Brio Technology (Nasdaq: BRYO) for
$311 million.
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