Tornado Insider forecasts downward funding trend to cease this quarter

“The last quarter of 2003 is set to become a turning point in the VC funding trend of the past three years in Europe and Israel. Since Q3 2000, each successive quarter showed a decrease in venture capital invested in technology companies. A whopping decrease of 89.3% in quarterly VC funding has occurred from Q3 2000 to Q3 2003. However, the Q3 2003 figure of €618 million will prove lowest since the downturn, even after Q4 has finished.

The market has shown clear signs of stabilization throughout this entire year. After very strong June and July months – July presented most VC activity in 2003 with €311 million invested in 63 deals – the market dropped to an all-time low in August with little more that €110 million reported. However, the gentle quarterly decline this year will be topped off with an increase.”

VC is not, as many believe, a leading indicator; it is a lagging indicator that tends to follow the markets closely. This announcement shouldn’t come as a surprise to anyone. I just hope the market doesn’t tank from some external reason…

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