Australians may miss the VC boat

Australians may miss the VC boat

Venture capital (VC) funding in the US has smashed previous records, according to a recent survey by PricewaterhouseCoopers.

Vivian McCarron, Australian venture capital partner at PricewaterhouseCoopers, believes businesses here will have to start doing things more efficiently and faster, "otherwise the US market is going to take us out".

Despite this warning, McCarron said services companies catering to high-growth areas, such as technology, are well placed. She said there are a lot of mergers and acquisitions going on in this area at the moment, some of which are with technology companies themselves.

"Service companies have to get a lot more clever about setting up alliances," she said. "If they don't merge or acquire, the only way to move forward will be to set up close alliances."

PricewaterhouseCoopers' Money Tree National Survey was released last week. It found that venture capital investment in the US reached a record $US35.6 billion in 1999.

Incredibly, more than 90 per cent of all VC investments in the US last year were made in technology-based companies, including Internet-related businesses. Dollar investments tripled from $US10.8 billion in 1998 to $32.4 billion last year.

Internet-related investments increased about six-fold from $3.4 billion in 1998 to $19.9 billion in 1999, which accounted for 56 per cent of total investments. The average funding rose to $11.1 million, a 98 per cent increase over the previous year.

PricewaterhouseCoopers' categories of Internet companies listed in the survey included business-to-consumer e-commerce sites, which captured the largest share with $4.46 billion (an increase of 1092 per cent), business-to-business e-commerce sites (increasing 908 per cent over 1998) and access/infrastructure companies (547 per cent).

The survey's business services category saw a 522 per cent increase, the new media category rose 501 per cent to $2.9 billion, and its retailing/distribution category increased 353 per cent to $3.6 billion.

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