Tuesday, February 24, 2009

Surprising Venture numbers

Dan Primack over at peHub published an interesting post regarding the number of seed and early-stage venture deals completed between 1995-2008. Click here for the link.

Surprisingly, even with a dismal Q4, the number of seed-stage deals, and the % of venture deals that were funded by professional venture firms in 2008 was nearly at a post '00 bubble record. The high volume extended beyond seed, into early stage investing too. Though it's hard to capture all the transactions in any given year in this highly fragmented, and geographically disperse arena, I can only assume the trend data is more or less correct.

If anything, due to the deep participation of Angels in this asset class (for disclosure, I am on the board of the NY Angels), I suspect the numbers are under reported.

With all the talk about 'VC bailouts' and government assistance to the asset class, nothing like some common data to stir it up. My view is that late in 08 many venture funds began to revisit their reserve assumptions. As a consequence to decisions to hold more capital to support existing investments, we are now seeing a pronounced slowdown in funding for early stage companies. This is driving the hue and cry to favor profitability, even at the expense of growth.

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