Corporate venture capitalists' investment in the first half of 2007 hit a six-year high, reflecting an effort by companies to cushion themselves against the credit crunch with long-term contributions and providing further evidence of a post dot-com resurgence of technology funding.

For the first half of the year, corporate venture capitalists made $1.3bn (€953.2m) of the $14.5bn invested in venture capital deals, and participated in 21.4% agreements.  This compares with the first half of 2006 when corporate venture capital companies participated in 19.8% of all deals and contributed 7.5% percent of total dollars.

At the height of corporate venture capital investment in 2000, corporations contributed $16.5bn to 2,123 deals, accounting for 15.7% of total venture capital backing.  Corporate venture capital companies invest directly in portfolio companies, through traditional, independent venture capital funds or without a partner. The 60 companies account for 15% of National Venture Capital Association’s membership.

The software sector continued to dominate corporate venture capital investment, taking 20% of dollars for the first half of the year, compared with 14% for the same period in 2006. Biotechnology accounted for 19% of spending, and medical devices accounted for 15%. Arvind Sodhani, president of Intel Capital, the venture capital arm of software maker Intel, grew the company’s investments by over 26% to $1bn in 2006.  The total number and value of mergers and acquisitions has fallen sharply in the past year compared to initial public offerings.

Mark Heesen, president of the National Venture Capital Association, said: “We are such long-term investors that what’s happening in the market today is not as important as where it will be in five to 10 years. Portfolio companies on the exiting side is where we are concerned about the credit crunch. The IPO market has been very healthy for the first time in a very long time.”  Heesen said mergers and acquisitions were more subject to volatile conditions and the whims of the financial markets.

He said: “We have already seen a squishier M&A market with fewer deals but better acquisitions, but if the credit crunch becomes more severe the market could go on a hiatus period.”