Generally, the high tech market remains soft with no specific signs that things will improve in the near future. In the WSJ Venture Capital Dispatch on July 8, 2009, it was reported that venture capital funding plunged 63% ($5.1 billion) in the first half of 2009 as compared to the first half of 2008 ($13.6 billion). Across all asset classes, the amount of capital raised was down 64% in the first half of 2009 from the same period a year earlier. The inability to raise additional funding, has slowed the flow of funds into both new and existing companies.

There was one bright spot on the horizon as reported in the MHT on July 18, 2009. The second quarter of 2009 appeared to mark a turnaround for venture capital investing, as total dollars invested in venture-backed companies increased over the previous quarter for the first time since Q2, 2008, according to numbers released Saturday by Dow Jones VentureSource.

Nationwide, across all sectors, venture-backed companies took in $5.3 billion in Q2, 2009, spread across 595 funding deals, the financial tracking organization reported. The total dollars represented a 31.7 percent increase over Q1’s dismal $4 billion invested – the greatest Q2 over Q1 increase in the past five years.  Nationally, numbers remained down compared to last year’s second quarter, according to VentureSource.  Overall venture dollars invested dropped 36.7 percent, to $5.3 billion.  IT investment dropped 41.4 percent, to $1.9 billion.  Healthcare investment fell 14.3 percent, to $2.2 billion, and renewable energy investment dropped 75.4 percent, to $220.6 million, quarter over quarter.

(Paul Gasparro is Co-founder and Vice President of Business Development for MapleWorks – the smart choice for on-shore software development.)

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