Startup Life
Technology. Startups. Venture Capital. My Life.
Posts tagged Venture Capital
Global VC Blog Directory
Jun 2nd
Attention all entrepreneurs and start-ups!
A comprehensive list of VC-authored blogs have been compiled by Larry Cheng, a Boston-based VC. The list was ranked by number of Google Reader Subscribers as of May 2009.
If you’re getting serious about pitching for venture dollars, I suggest that you start subscribing to some of these blogs (just add them to your Viigo feeds).
It’s important for entrepreneurs to know about a number of things before pitching for dollars:
1. Understand the psychology of VCs
2. Understand the business models of VCs
3. Understand how to pitch VCs
4. Understand how NOT to pitch VCs
5. Understand WHEN to pitch VCs
6. Pitch VCs with a focus in your business sector
7. Don’t pitch VCs with your competitors already in their portfolios
8. Know your pitch cold
9. Spend a few extra minutes on the slide deck
10. Know the risks associated with your business (model) and suggest mitigating strategies
11. The list goes on…
Many of the blogs listed in the index will give you lots of tips in these areas. Happy reading!
Venture Capital and the Economy
May 1st
Today I had some time to explore what the economic downturn means for venture capital investors. The result: no new IPOs and lower M&A exit numbers (source: NVCA reports).
- No IPO activity for two consecutive quarters (first time on record)
- 56 M&A exits in Q1 2009; 13 totaled $645MM – in that last 3 years that number has been closer to 100 M&A exits; average value of $49.6MM / exit
- Due to the lackluster IPO market, corporate acquirers are being more selective and taking their time when considering acquisitions
- IT sector led the venture-backed M&A market with 42 deals and total value of $348MM
The NVCA also stated that 40 venture firms raised $4.3B in Q1 2009. This happens to be the smallest number of venture funds raising money in a single quarter since Q3 2003.
How are venture firms adapting to the downturn?
VCs are saving funds to support existing portfolio companies that may be experiencing lower sales volumes, or cash flow issues due to problems with accounts receivable or inventory. In addition, VCs are taking more time to support portfolio companies from an operational perspective; it’s a good time to trim the fat, get lean, and bring in some very experienced talent that can now be found readily on the street.
In light of poor IPO and M&A markets, valuations have been pushed down significantly. Companies are once again being evaluated on revenues and other real metrics. There are still many over-inflated venture-backed companies out there and many VCs are waiting for valuations (or valuation expectations) to decrease before injecting cash. It is becoming more of a VCs market to demand their price.
One more thing — since many VCs have closed their doors to new investments, existing VCs can be more selective in the investments they would like to pursue. This increase in stringency will hopefully result in more winners being picked during these trying months.
Bob Mast, who is the Managing Director at Monument Group thinks “the world is divided into 3 groups: people with severe cash flow problems that have halted commitments, people who are over their target and are being very selective, and people who have money but are still nervous.”
Like many others out there, I am hoping for a turnaround and markets to reignite very soon. Until then, I’ll be keeping my head down and trying to pick winners.
Cleantech VCs ready for 2008
Jan 7th
According to the National Venture Capital Association (NVCA), VCs are going to continue to pour money into Cleantech areas beyond solar and biofuels. There will be consolidation, more venture-backed IPOs and an eventual over-valuation of the sector. See the NVCA Report.
Will the sector really become over-valued though? With global demand increasing everyday from the emerging market – notably the drastic increases seen in the middle classes of India and China – it is very hard to state exactly where an upper boundary exists. Growth these days is not limited to the US, but it is measured in a global framework that is only beginning to be defined by newer business trends and strategies.
Global warming and energy reserves continue to be an issue that becomes more evident everyday. Until realizable change is evident, the cleantech market will continue to grow and expand at obscene CAGRs. We are only at the dawn of a new era in renewable energy and cleantech; hang on for the ride.
Cleantech Spending
Apr 30th
Amidst a flurry of chatter about cleantech and investment from VCs, there is some interesting results coming from a recent report from Lux Research. As the graph at right shows, there is about a 50/50 split between government and corporate funding of cleantech investment, with only a minor contribution from venture capitalists. At least we are seeing an increasing trend …
Below we see the cleantech investment by segment in total, and from VC funding. In the past three years we can see quite clearly that VCs have been investing in energy and sustainability which matches overall spending patterns.
What will 2007 bring? Leave your opinion …