1995 Venture capital investment tops $7.5 billion; Venture capital investment sets record at more than $2.3 billion in fourth quarter 1995, as reported in the Price Waterhouse LLP National Venture Capital Survey.

SAN JOSE, Calif.--(BUSINESS WIRE)--Feb. 27, 1996--Venture capital funding of more than 1,500 companies exceeded $7.5 billion for 1995, according to the results of the Price Waterhouse LLP Venture Capital Survey announced today.

Fourth quarter 1995 venture capital investment reached $2.34 billion, outpacing the previous record for the year of $2.12 billion set in the second quarter.

Collectively, technology-based companies secured more than $4 billion, or 53 percent, of total venture capital investment in 1995. The communications and software segments received the most investment at $1.4 billion and $1.3 billion, respectively -- or 18.4 percent and 17.1 percent of total venture capital funding. The consumer and healthcare industries followed at $908 million and $793 million, respectively -- or 12% and 10.5% of funding.

"The cumulative results in 1995 reflect continued confidence in the U.S. economy and show the optimism venture capitalists have in the future of American business," said Donald A. McGovern, chairman, Price Waterhouse High Technology Group.

Geographically, venture capital investment in 1995 was dominated by Silicon Valley, which secured $1.7 billion, or 22.5 percent of all funding. The Southeast ranked second at $953 million, or 12.6 percent; the New York Metro area was third with $796 million, or 10.5 percent; and New England was fourth with $628 million, or 8.3 percent.

Trend Toward Convergence Continues in Fourth Quarter

Fourth quarter 1995 venture capital funding jumped 54 percent from fourth quarter 1994 investment, which totaled $1.52 billion. Excluding buy-outs and IPOs, venture capital investment in fourth quarter 1995 reached $1.86 billion.

Investment in "early-stage" and "start-up" companies jumped markedly to 40 percent of all companies receiving investment and 31 percent -- or more than $700 million -- of all funds, up from 38 percent of all companies and 19 percent -- or $316 million -- of all funds in the third quarter.

Technology-based companies -- which include biotechnology, communications, electronics, environmnental, medical instruments, hardware, semi-conductor and software -- again secured the majority of investment funds: 64 percent of all companies receiving funds and 61 percent of total investment dollars in the fourth quarter. Software and communications combined earned 43 percent of total investment dollars, with $490 million and $489 million, respectively. The consumer industry ranked third with more than seven percent of total funding, followed by the healthcare and industrial segments.

"Technology companies remain the leaders in acquiring venture capital investment. Specifically, the rise in the communications segments, including the Internet and networking, shows a trend toward convergence," said McGovern.

The Price Waterhouse LLP National Venture Capital Survey

Endorsed by the National Venture Capital Association and the National Association of Small Business Investment Corporations, the Price Waterhouse National Venture Capital Survey, conducted under the sponsorship of the Price Waterhouse High Technology Group, has been administered quarterly to more than 1,000 firms that act as sources of venture financing. These firms fund U.S. companies representing more than 15 industries nationwide.

In the fourth quarter 1995 survey, responses were received from 390 venture capitalists, or 36 percent of solicited firms. The Price Waterhouse Survey Research Center in Washington, D.C., verified, tabulated and analyzed the data. Of the 390 venture capitalists responding to the survey, those making investments also identified 64 co-investors; therefore, fourth quarter results reflect the activity of a total of 454 venture capital firms.

For nearly 150 years, Price Waterhouse LLP has been helping the world's leading companies solve complex business problems. Today, through a worldwide network comprising 53,000 professionals in 119 countries and territories, Price Waterhouse LLP assists clients in implementing strategies to improve business performance; effecting organizational and strategic change; using information technology for competitive advantage; and meeting audit and tax requirements. Price Waterhouse LLP, with more than 16,000 men and women throughout the United States, is a vital part of the worldwide Price Waterhouse organization.

The Price Waterhouse High Technology Group is comprised of auditing, tax and management consulting professionals who assist companies in the life sciences; networking and communications; semiconductor; software, and computers and peripherals industries.

Comprehensive data from the Price Waterhouse LLP National Venture Capital Survey is available on-line via the Internet at the Price Waterhouse website: http://www.pw.com/vc.

CONTACT: Price Waterhouse

Kirk Walden, 214/754-8927

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Ketchum Public Relations 

Susan Suss, 212/878-4638