VC Research. Startup Investing Trends. June 2013 (This talk was written for an audience of investors.)
Y Combinator has now funded 564 startups including the current batch, which has 53. The total valuation of the 287 that have valuations (either by raising an equity round, getting acquired, or dying) is about $11.7 billion, and the 511 prior to the current batch have collectively raised about $1.7 billion. [1] As usual those numbers are dominated by a few big winners. The top 10 startups account for 8.6 of that 11.7 billion. Things got a little out of hand last summer when we had 84 companies in the batch, so we tightened up our filter to decrease the batch size. [2] Several journalists have tried to interpret that as evidence for some macro story they were telling, but the reason had nothing to do with any external trend. One consequence of funding such a large number of startups is that we see trends early.
VC funding for web reaches 10 year high. Venture capital investments continued to grow at a rapid clip in the second quarter of 2011, with VC firms investing $7.5 billion across 966 deals, according to the latest MoneyTree report from PricewaterhouseCoopers (PwC) and the National Venture Capital Association (NVCA.)
But some industry experts are saying that the current level of VC activity could be too good to be sustained. The second quarter of 2011 saw the highest total amount of money invested by VCs since the second quarter of 2008, according to the MoneyTree report released this week. Quarterly venture capital investment activity increased 19 percent during Q2 compared to the first quarter of 2011, during which VCs invested $6.3 billion in 814 deals (click on image to expand): And if you think VCs have been putting a lot more money than usual into web startups, you’re absolutely right. Investments in Internet-specific companies rose to the highest quarterly level since 2001. Angel / VC Funding in A Frothy Market.
There Aren't Many Exits Over $100mm. I was reading Mark Suster's latest blog post (actually its a presentation embedded into a blog post) and I came across this slide.
I don't know what the source of this data is and I don't know if this is just M&A exits or if it includes IPOs as well. It really doesn't matter for the basic point that Mark is making with this slide. Based on the NVCA statistics on the venture capital industry, there are on average 1,000 early stage financings every year. Web IPO Boom Splits VC Haves From Have-Nots. LinkedIn Corp. and Groupon Inc. are leading a surge in Web-company initial share sales that underscores a deepening chasm between the venture-capital industry’s haves and have-nots.
Sequoia Capital, Greylock Partners, Accel Partners and Andreessen Horowitz are among the few firms that own stakes in the most valuable startups, giving them access to promising entrepreneurs and plenty of money for new funds. The majority of the industry, meanwhile, is struggling to raise capital. Venture Capital. Quigley Report: A Venture Capital Revival is Upon Us.
The Venture Capital Revival. There have been a number of narratives in circulation over the last year or so: the "we're in a tech bubble" (or "we're not in a tech bubble") narrative, the "venture capital is in decline" narrative (or "venture capital is broken").
So here's a new one to add to the mix: we're in a "venture capital revival. " That's the argument being made by Clearstone Venture Partner's Managing Director William Quigley. His 50-page report, released today, chronicles the changes to venture capital over the past decade and ends, not with an assessment about the end of VC but rather the possibilities for a stronger future.
Not_available. How VC’s Win March 22, 2011 VC’s grill entrepreneurs all the time about how they will win vs. their competitors.
Why Venture Capital Returns Are Going Up - Venture Capital Dispatch. Sean Parker of Napster Sees Gloom in Venture Capital. Noah Berger/Bloomberg NewsSean Parker says venture firms are interested in investing in companies that they could sell to Google or Microsoft.
“There’s too much money chasing too few deals.” Sean Parker, the entrepreneur behind Napster and Facebook now turned investor, was talking about the state of the venture capital industry last week over coffee. At 30, Mr. Parker, who was recently portrayed by Justin Timberlake in “The Social Network,” has been thinking a lot about innovation — or the lack of it — in the United States. And he’s come to a depressing conclusion about the money industry that he says used to be “the engine of innovation” for this country. As the Startup Funding Model Evolves, Angels are Winning: Tech News « In the race to attract attention from startups and entrepreneurs, angel investors appear to be winning, and that’s accelerating an ongoing shift in the venture capital market — what some would argue is an evolution of the startup-funding model.
A new survey from Dorsey & Whitney (PDF), a Silicon Valley law firm that specializes in advising startups, shows that startups are increasingly turning to angels, not just for their initial rounds of funding but for subsequent rounds as well. Meanwhile, the most recent data on the VC industry shows that traditional venture funds have only raised $9 billion so far this year, a significant drop from the amount raised in previous years.
Insiders have been arguing for some time that the VC business needed to get smaller, and it appears to be doing that in more ways than one. Related content from GigaOM Pro (sub req’d): There Are Two Venture Capital Industries. I attended a breakfast meeting the other day where David Silverman of PWC presented the latest Money Tree data on the venture capital business to a room full of entrepreneurs and VCs.
As I sat there and listened and read the charts, it occurred to me that there are now two distinct and very different venture capital businesses. The first VC industry is investing in software based businesses. The software VC business has been fundamentally altered by the massive decrease in the cost of building and launching a software based business.
The segmentation of the venture industry cdixon.org – chris dixon's blog. Ford Motors dominated the auto market in the early 20th century with a single car model, the Model T.
At the time, customers were seeking low-cost, functional cars, and were satisfied by an extremely standardized product (Ford famously quipped that “customers can choose it in any color, as long as it’s black”). But as technology improved and serious competitors emerged, customers began wanting cars that were tailored to their specific needs and desires. The basis of competition shifted from price and basic functionality to ”style, power, and prestige“.
A Tale Of Two VC Industries: The Web Versus Cleantech. Last week, venture capitalist Fred Wilson wrote a post pointing out that the VC industry is split in two: software-based businesses and everything else (specifically, “cleantech, biotech and other capital intensive businesses”). Software businesses don’t require as much capital as they once did, and certainly not as much as cleantech or biotech. In fact, I’d go so far to say that the main asset venture capitalists bring to the table for Web startups is no longer capital, but rather connections, advice, and deal-making prowess. Whereas for greentech and biotech, the capital is still the most important thing they bring to the table. Venture Fund Performance. What I *Would Have* Said at TechCrunch Disrupt. What do you get when you combine 7 panelist plus one moderator on to a stage for 30 minutes to talk about a serious topic? Answer: Not much.
And that was evident on today’s Angel vs. VC panel. Web 2.0 Is A Gift, Not A Threat, To VCs. NOTE: I mislabeled the x-axis in the orginal charts in this post as "months since formation". They should have been labeled "quaters since formation". Thanks to Brandon Watson for pointing out the error. I’ve changed the charts and they are correct now.
Things I'd do if I ran a big VC firm.
Ten Meetings Per Day. I was explaining how I go about finding deals yesterday to a friend of mine and I thought I ought to explain it to everyone. I write this blog. It's like a broadcast channel of "what is interesting to me. " I market it every way I know how and I get somewhere between 70k to 100k unique readers of it every month between web, rss, and mobile. As a result, I figure entrepreneurs and others have a pretty good idea of what I want to see and what I don't. And I believe they can self select. » Early exits (without VC funding. The National Angel Capital Organization had their annual summit last week in Toronto. The summit is a gathering of angel investors and angel group managers from across Canada to discuss best practices and current trends in angel investing.
Two main themes in this year’s conference were co-investment and early exits. I’ll cover co-investment in another post. Poking Fun At VCs - Forbes.com. Company Math vs VC Math. The 'We Need To Own' Baloney. I met with an investor, what happens next? This is part of my ongoing series, “Pitching a VC.” Getting a meeting with a prominent angel or VC is difficult enough. The Price is Right « Five Years Too Late. StartupCFO: Investors and Exits. The Great VC Ice Age is Thawing (for now) – Part 1 of 3. When venture capitalists scale back investing activities it can be very swift and leave many companies that are in the process of fund raising hung out to dry. Just ask anybody who was trying to close funding the fateful week of September 11, 2001 or even March 2000. Good Times Ahead for VC-backed Tech Companies?
The Arrogant VC: Why VCs are disliked by entrepreneurs - Venture. The Arrogant VC: Why VCs are disliked by entrepreneurs, Part 2 - Guest Author · January 2nd, 2010 Thanks to Atlas Venture for supporting Venture Hacks this month. This post is by Fred Destin, one of Atlas’ general partners. If you like it, check out Fred’s blog and tweets @fdestin. – Nivi.
The Twitter investment and the decline of venture capital — cdix. Binary Pricing « Five Years Too Late. VC DNA - Make Sure You Get a Swab - The Post Money Value. In between pounding on my product and getting ready for our beta (if you have a BlackBerry Device and are interested, email me), I've been trying to hold true to the giving back/pay it forward philosophies by meeting with the occasional start up to help review this or that. It's free advice and worth every penny. Over the last couple of weeks, I've met up with two start ups which stand out in my mind because of the interactions they've had with my former work life; the VC community. Both were at the early stages of business SU1 opened the conversation with "If we just told our VC we quit, left, and started something new, could they get our houses?
" Venture Capital Business Model. Plant More Seeds vs Tending The Crop. New Year's Resolution? VCs Could Spend More In 2010. 2010 Will See Some Venture Firms Fold – GigaOM. U.S. Private Equity Firms Raised Less Than $100B In Funds Last Y. Report: Private equity outperforms venture capital. More diligence and less capital coming for startups (and their i. Winner Take All and Early Stage Valuations - Continuations.
Capitalism just like Adam Smith pictured it cdixon.org – chris d. The Future of Venture Capital Is Gross. What is an east coast term sheet? - bijansabet.com. 2010 Off to Slowest VC Fund Raising Start Since 1993, Says NVCA. Old VC firms: get ready to be disrupted cdixon.org – chris dixon. Some VC Practices I Admire - robgo.org. Size Matters (at least for venture funds) Despite Short-Term Improvement, VC 10-Year Index Goes Negative - Grading Union Square Ventures' Portfolio. Video: Angel Investor Chris Dixon on Startups & Why the VC Model. Private Equity Continued to Outperform Venture Capital in the First Quarter of 2010, Though Returns for Both Asset Classes, While Positive, Trailed Public Market Returns.
Data. The dark side of VCs.