Venture-capital investments in IT companies plunged 40 percent to $2.18bn in the fourth quarter, their worst level in a decade, according to figures released late on Friday by VentureSource.
The data further confirms concerns entrepreneurs have already been raising about a funding pullback by VCs over the second half of the year and dire warnings by the VCs themselves.
IT venture capital dropped to $11.64bn (£8bn) for all of 2008, down 14.5 percent from the previous year, according to VentureSource. During the past year, IT investments posted growth in the first quarter and a slight decline in the second, but significantly dropped off in the second part of the year, VentureSource said.
Software companies, which continue to capture the largest slice of IT venture investments, dropped 16.4 percent during the year, to $4.73bn in funding.
Venture investments in communications and networking start-ups fell 32.3 percent to $1.68bn in 2008, while investments in semiconductors dropped 23.5 percent to $1.25bn year-over-year. Electronics and computer companies, meanwhile, saw venture investments fall 15.5 percent over the previous year, reaching $1.31bn.
Despite the doom and gloom of 2008, the web-savvy information services sector posted a 16.9 percent year-over-year gain in venture investments last year — to the tune of $2.67bn. While that sector managed to shine through most of the year, venture investments did fall off 30.5 percent to hit $513.2m in the fourth quarter.
