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Tag >> venture capital
It is not exactly happy days here again in the venture capital world.
Sure in 2010 the number of deals rose by 6 percent, to 2,799 over 2009 and the amount of capital invested in those transactions climbed 11 percent to $26.2 billion, according to Dow Jones VentureSource.
Venture capital investment may be declining, but not for start-ups. Early stage financings continue to hold the imagination of VC investors, according to a new report out by PricewaterhouseCoopers (PWC) and the National Venture Capital Association (NVCA).
The report provides an update on venture capital investing in the third quarter of the year, and put investment activity at $4.8 billion in VC dollars spent on 780 deals over the quarter. This is a pretty significant decline from the previous quarter, which saw $6.9 billion spent on 962 deals.
This will be quite a week for women entrepreneurs. Not only is the first-ever gathering of East coast-West coast women entrepreneurs—and potential start-up investors—happening in Silicon Valley, but there are also events worldwide for women—and men—during Global Entrepreneurship Week.
Such events are critical for encouraging women to seek out financing and partnerships for growing their small businesses or business ideas.
Another source of funding for small businesses is coming back.
Venture investors pumped $5.5 billion into 662 deals for US-based companies during the third quarter of 2010, according to Dow Jones VentureSource. This works out to a 5 percent decline in the value of the investments but a 2 percent increase in the number of deals from the same period last year.
Liquidity is clearly improving in the venture capital market, making it easier for investors to cash out their investments.
During the third quarter, there were 111 venture-capital backed company exits, netting $6.4 billion. The number of exits rose by 11 percent while deal volume surged 70 percent compared to the same quarter a year ago, according to Dow Jones VentureSource.
It’s a trend that many may have noticed on some level, but few have actually pointed out. Fewer and fewer start-ups are aiming for an IPO. More and more the goal is to sell out to someone larger, who can move the company to the next level or bolt it onto their existing infrastructure.
However, venture capital available to start-ups and later-stage developments is continuing to grow at a rapid pace. Some of the biggest VC deals in the second quarter this year were in the range of hundreds of millions of dollars.
Independent venture capital firms aren't the only ones making VC investments. Many corporations also have their own investment operations. Usually aimed at eventually buying the most promising startups, these entities often aren't run as independent business units.
Only their bets don't usually pay off, at least not for shareholders.
With money starting to once again flow back into the technology space, investors are keen to get in on the ground level of new technology–and find that next Facebook or Google.
They are, of course, investing with caution. However, one of the key mechanisms that has long helped fuel such development has been the incubator model–where entrepreneurs can enter an intensive incubator program, get access to potential funding, and valuable education and advice to help them move along a start-up idea.
Venture capital companies have doled out cash to a plethora of start-ups in the past couple of weeks, even as they raised much less in new funding this quarter. Unless investors start opening their wallets and adding to VC coffers, this bounty cannot continue for long.
Companies in the technology and pharmaceuticals industries were the recipients of big investments from the VC community over the last two weeks, with numerous start-ups receiving funding.
Call it a victory for the venture capital industry.
Unlike other alternative investment firms such as private equity funds and hedge funds, under the new financial regulation bill venture capital funds are not required to register with the Securities and Exchange Commission if they have at least $150 million under management.
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