Venture Capital Investment in Communications Industry Hits All-Time High According to PricewaterhouseCoopers Survey

Business Wire, Nov 17, 1999

NEW YORK--(BUSINESS WIRE)--Nov. 17, 1999--

According to PricewaterhouseCoopers Money Tree Survey, almost one-third (30 percent) of all venture capital investments in the United States this year went to businesses in the communications industry. Venture capital investments in the U.S. reached $21 billion during the first three quarters of 1999, an increase of 48 percent over the investment level for all of 1998. Of that total, the communications industry received $6.3 billion, the largest share of any industry sector. Through the first three quarters of this year, dollars going into venture-backed investments in communications companies jumped by 131 percent over the same period of 1998 and already eclipsed the final investment totals for all of last year by 59 percent.

According to Tom Colligan, global leader of PricewaterhouseCoopers' InfoComm Business Advisory Services practice, "The influx of venture capital money into communications companies provides clear evidence that this industry is a key driver of the new economy."

PricewaterhouseCoopers Money Tree Survey tracks quarterly investments in U.S. companies by venture capitalists nationwide in all types of industries. The focus is on the total amount of funds received by companies in return for equity, usually preferred stock. Additional information on the Money Tree Survey can be found at www.pwcmoneytree.com.

Other Communications Related Findings:

- Bigger Deals. Through the first three quarters of 1999, the

number of deals between venture capital firms and communications

businesses is up 37 percent and the size of the deals is 57

percent larger.

- Communication Breakdown. Of the $6.3 billion invested in

communications companies during the first three quarters of the

year, 31 percent went to equipment suppliers, 29 percent went to

Internet businesses (content companies, ISPs, e-commerce

services) and 24 percent went to telecommunications service

providers (CLECs, DSLs, carriers, wireless providers, satellite

services, fiber nets). The remainder of investments went to

software development companies, technical service businesses, and

cable and broadcast operators.

- Telecom Equipment. Equipment manufacturers received $2 billion in

VC funding during the first three quarters of the year. This

represents an increase of 89 percent over the same period of a

year ago and 34 percent over all of 1998. Of the $2 billion in VC

investments, 45 percent went to wireline network suppliers, 31

percent to optical fiber network suppliers and 21 percent to

wireless network suppliers. The remainder of investments went to

component development companies and video production suppliers.

- Internet Investments. Internet service providers received $1.9

billion in VC funding during the first three quarters of 1999.

This represents an increase of 325 percent over the first three

quarters of 1998 and 205 percent over all of last year. Of the VC

dollars flowing to Internet service providers, 70 percent went to

on-line content providers and 30 percent went to e-commerce

providers and businesses offering technical support for Web site

operations.

- Telecom Service Providers. Venture capital funds flowing to

telecommunications service providers hit $1.5 billion during the

first three quarters of this year. This level of funding is 191

percent greater than the level for the same period of a year ago

and is already 57 percent greater than all of 1998. Of the $1.5

billion going to telecom service providers, 46 percent went to

CLECs and DSL carriers, 25 percent went to wireless carriers, 15

percent went to resellers (in-building service providers, prepaid

retailers), and 9 percent went to international carriers and

satellite service providers. The remainder of investments went to

backbone networks and other telecom services.

PricewaterhouseCoopers is one of the leading suppliers of services developed specifically for the communications industry. The firm's global network includes thousands of professionals with deep industry knowledge who provide a full range of management consulting, information technology, tax and business assurance services.

PricewaterhouseCoopers (www.pwcglobal.com) is the world's leading professional services organization. Drawing on the knowledge and skills of 150,000 people in 150 countries, we help our clients solve complex business problems and measurably enhance their ability to build value, manage risk and improve performance. PricewaterhouseCoopers refers to the US firm of PricewaterhouseCoopers LLP and other members of the worldwide PricewaterhouseCoopers organization.

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