Backers venture into US start-up firms

THREE American start-up companies have been launched using venture capital in the past few days, signalling that the long slump in the sector may be ending.

A total of $46.4m (£25.2m) was invested in the three projects - a company that puts mini-clinics in supermarkets, a chipmaker and a computer networker.

While the companies are small, it is a indication that venture capitalists may be again prepared to take on riskier bets. The source of funding had all but dried up.

A study by Global Entrepreneurship Monitor revealed that, of the $18.2bn in venture capital invested in 2003, only $304m was put into start-up companies, the lowest amount since 1980.

But latest figures though from PricewaterhouseCoopers and Thomson Venture Economics show a rising number of venture capital investments in early-stage companies.

The 231 companies funded in the second quarter of 2004 was the highest for two years and accounted for 30% of all investments, the highest proportion for more than three years.

Total investments by venture firms rose 22% in the second quarter of this year, to $5.8bn from $4.7bn in 2003.