The public markets may tremble, and the e-commerce boom may fall, but it seems that nothing short of an all-out fiscal depression is going to prevent venture capitalists from continuing to plug record amounts of private funding into innovative new companies. If anything changed in the months following the market correction in April, it was VCs shifting their interests from e-tailing to technologies that will enable the New Economy to reach the next level.
According to a report issued by Venture Economics, in association with the National Venture Capital Association, VCs invested a record-breaking $43.39 billion in 3,322 companies during the first half of 2000. This compares with VC investments totaling $19.28 billion in 2,045 companies during the first half of 1999.
The online-specific, computer software and services, and communications industry groups maintained their “most favored” status among VCs. Online-specific plays led the way with 1,604 companies garnering approximately $25.41 billion, or 58.56% of all venture capital invested during the first half. Computer software and services followed a distant second with 616 companies receiving investments of about $7.81 billion. Communications rounded out the triad with 318 companies receiving about $6.79 billion.
Internet-related investments totaled about $39 billion for the first half of 2000. Broken down a bit further, online content or services companies accounted for 39.9% of the sector’s funding, online communications/infrastructure companies accounted for 23.6%. E-commerce companies finished third with 20.7%, while software and services companies placed fourth with 15.8% of the sector’s funding. Comparing the first two quarters of the year, the e-commerce sector was hit the hardest with investments declining from $5.19 billion in the first quarter to $2.89 billion in the second quarter.
As usual, industrial/energy companies battled biotechnology interests and consumer-related firms for the lowest spot on the venture financing totem pole. This time around, industrial/energy companies placed last with only 37 companies receiving investments of $598 million. Biotech and consumer-related companies ran on an even course, with 98 biotech plays receiving $931 million and 88 consumer-related plays receiving $914 million.
In terms of regional results, the report gives Silicon Valley-enhanced Northern California the edge with 864 companies funded for approximately $13.08 billion. The Northeast followed with 637 companies funded for about $8 billion. The Northwest region lagged behind with $1.46 billion invested in 140 companies. t
 Online specific is a narrow definition of companies that would not exist without the Internet and that would not fit in any other industry sector category.
 Internet-related describes companies that provide content, e-commerce, hardware or software to the Internet economy. Internet-related companies are found in all industry sectors.