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Small Business
Money, money everywhere
October 16, 2000: 7:03 p.m. ET

Private equity financing exploded on a worldwide basis in 1999, new study says
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NEW YORK (CNNfn) - The amount of private equity financing available to startups and mid-sized companies exploded globally in 1999, according to a survey of global financing released today by PricewaterhouseCoopers MoneyTree and 3i, a global venture capital firm.

The study, the first collaboration of its sort by the two firms, revealed private financing across the globe rose to $138 billion in 1999. That figure represents an increase of 65 percent from 1998. Data collected thus far for 2000 indicates that private investment is increasing at a similar, perhaps even greater, rate this year.

"This study confirmed that what has been happening in the United States is actually happening globally," said Tracy Lefteroff, managing partner of PricewaterhouseCoopers' private equity and venture capital practice.

The data on private equity financing includes money raised through venture capital, corporate venture financing, incubators and leveraged buyouts.

United States attracts the biggest share


The vast majority of the money, more than $98 billion, went straight into the coffers of United States companies. That figure represents a 76 percent increase over 1998, in which private equity financing in the U.S totaled $56.4 billion.

graphicMore than half of the $42 billion increase, or $22 billion, in private equity investments can be attributed to the rise in venture capital financing. Lefteroff pointed out this is not unique to the United States; venture capital financing grew in nearly every global region during 1999.

Venture capital funding worldwide grew to 37 percent of all private equity invested in 1999 from 26 percent a year earlier.

"There is a tremendous amount of money chasing venture investments everywhere," Lefteroff said. "As long as the returns are there, the venture business is going to get a bigger piece of the pie. We think that trend is definitely going to continue."

Technology hot across the globe


Also on the rise in many regions is the amount of private money earmarked for investment in the technology sector. In North America, the amount of money invested in technology companies grew by 51 percent in 1999 to $33 billion. In Western Europe, investment in technology, primarily in computer software, increased by 84 percent, to about $8 billion.

Asian investment in the technology sector recovered slightly in 1999, after suffering during the Asian financial crisis. The region clocked about $2 billion in private equity for tech companies, an increase of 13 percent over 1998. Most of the $2 billion was parceled among companies in Taiwan, Hong Kong, Singapore, Korea, and Japan.

Owing to Israel's growing international prominence in developing technology, the Middle East and Africa experienced an increase of 41 percent to $1.4 billion in private equity financing. A full 97 percent of all private financing in the region, more than $1 billion, went to fund technology startups in Israel.

Central and eastern European companies saw only slightly more, 19 percent, private equity funds available, totaling about $424 million. Only central and South America actually saw a drop in the amount of private financing available in 1999. During that period, about $800 million was raised, representing a decrease of about 78 percent.

The study once again points out a major divergence between jittery stock markets and, in sharp contrast, confident venture capitalists, who continue to pour huge amounts of money into fledgling companies, particularly those focused on emerging technology.

"The stock market may be uncertain about the economy, but venture capitalists aren't. They're betting on the future," said Lefteroff.

Indeed, Wall Street has largely been put off by layoffs and losses at Internet companies this year. Venture capitalists, on the other hand, have promised they will continue to fund technology companies. The deals may be fewer and for more money, but they have guaranteed the venture capital well is far from dry for good companies that can prove they'll be able to turn a profit.

PricewaterhouseCoopers and 3i pooled their resources to survey companies engaged in venture capital and leveraged buyouts in every major capital market in the world. Back to top

  RELATED STORIES

Venture funding explodes - Aug. 14, 2000

Wanted: wealthy partners for entrepreneurs - July 19, 2000

Venture funding still exploding - May 1, 2000

European venture capital puts money in hi-tech - June 15, 1999

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.