The Incredible Shrinking Information-Technology Industry

Published on April 19, 2010
by Scott Austin

The information-technology industry, which produced some of the world’s largest tech companies and spawned Silicon Valley, continues to lose favor with venture capitalists.

Tech giants like Apple (AAPL), Cisco Systems (CSCO), Hewlett-Packard (HPQ), Intel (INTC), Oracle (ORCL) and Sun Microsystems all benefited in their early days from venture capital. By 2001, nearly 60 percent of venture capitalists’ money went into IT–everything from electronics and computing devices, to the software and semiconductors that power them.

But these days information technology is no longer the dominant force. Many venture firms lost patience with companies developing costly hardware like chips and networking equipment, and over time begin plowing an increasing share of money into less capital-intensive start-ups on the services side. At the same time, some IT investors began dabbling in the burgeoning clean technology field, while adding health care to their investment stable.

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