VC investment in equipment vendors rebounds strongly

Venture capital investment in networking equipment manufacturers rebounded strongly in the second quarter, according to PriceWaterhouseCoopers.

In 48 deals, VCs invested a total of $352 million in networking equipment vendors in the second quarter, PWC said--45% more than in the first quarter and 60% more deals.

The largest portion of that investment--24 deals worth a total of $170 million--went to later-stage companies. VCs also invested in 16 expansion rounds in the quarter worth a total of $135 million. But there were no start-up or “seed” rounds, PWC said.

Those second-quarter numbers are actually down sharply from a year earlier, when VCs invested $538 million in networking gear makers through 57 deals. But the numbers dropped off since then, falling consistently each quarter until this year’s second quarter.

VC investment in telecom service providers was flat in the second quarter, following a first-quarter decline. Investment in the wireless sector continued to decline, but the number of deals in that space rose slightly.

Overall VC investment across all industries rose 2% sequentially in the quarter to $6.3 billion, the highest amount since the first quarter of 2002. That growth was driven largely by the size of VC investment in networking equipment vendors and biotech firms.