BusinessCorporate FinanceCorporate venturing hits minuscule levels

Corporate venturing hits minuscule levels

The amount of money being invested by corporations in start-up companies has fallen dramatically since the dotcom bubble burst, matching a general decline in venture capital activity.

Link: Fewer start-ups venture into the market

As an example, chip manufacturing giant Intel invested $1.3bn in 2000, this shrank to just $350m in last year, while this year the amount is expected to be half this, according to a report in the FT.

Prior to 2000, giants like Intel, Dell, Sun Microsystems and Cisco invested heavily in IT start-ups. But the over-investment frenzy led to fall-out in the markets as IPOs deflated and many young companies folded.

As a testament to this, in the second quarter of 2002, UK business start-ups were down 11% compared to the previous year, a survey by Barclays found.

Steve Bengston, managing director of emerging company services at PricewaterhouseCoopers said: ‘Start-ups like to have large companies as strategic investors and venture capital firms like having a larger company as an investor because it provides a potential exit strategy.’

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