Chicago, Nov 18 2009 –  Both Venture and Buyout investing in Illinois companies declined in the third quarter of 2009.  Most firms are forestalling their next investment cycle until the market for exits improve.  A hoped for increase in  M&A activity has been hampered by the continued tight credit market and an almost invisible IPO marketplace.  There is hope both credit and IPOS will loosen in early 2010 at which time funds will be replenished allowing for improved fundraising for all stages of investment.

The lone glimmer of activity was found in venture capital investment by Illinois firms in “green” companies which maintained a healthy pace, with 2009 investments already surpassing three of the last five years.

Investment in green companies by Illinois firms totaled $102.6 million in the first three quarters of the year, above the $71.8 million in investments in the first three quarters of 2008 at the same time last year.  Illinois firms’ investment for the entire year of 2008 in green companies totaled $220.4 million.

Overall venture capital investment in Illinois totaled $14.9 million for the quarter, down 76.2 percent from the second quarter and 92.6 percent from the same quarter a year ago.  The quarterly sum remained well below the five-year quarterly average of $127.5 million. Nationwide, third quarter venture capital investments totaled $8.08 billion in the third quarter, which was also down 17.4 percent from the prior quarter and 36.1 percent from the third quarter last year. A total of nine Illinois companies received funds in the third quarter, down from 12 in the prior quarter and 29 in the third quarter of 2008.

The sluggish quarter for venture capital investment in Illinois pushed the state ranking down to 27^th in the nation, down from 18^th last quarter.  For the year to date, Illinois ranks 19^th in the U.S. in venture capital investment, with 20 companies receiving $120 million in funds, down from 18^th place after the first two quarters of the year.

Buyout capital investment in Illinois companies also declined, with only four companies receiving an undisclosed amount of buyout funds in the quarter versus seven in the second quarter and 15 in the third quarter last year.  The total for the quarter was also below the five-year quarterly average of 15 companies.  Nationwide, 347 companies received buyout funding versus 343 in the second quarter and 602 in the third quarter of 2008.

Investment in the Information Technology sector continued to lead Illinois VC investment, with six companies receiving $14.5 million in funds compared to two healthcare companies receiving an undisclosed amount and one other company receiving $400,000 the in the third quarter.

Illinois ranked sixth in the country in money raised by venture and buyout funds, with $352.3 million raised in the third quarter, compared to number one ranked New York which raised $5.2 billion. Illinois also ranked sixth in venture and buyout assets under management, with $1.3 billion in funds compared to the number one Massachusetts with $8.1 billion.