Tuesday, November 22, 2011

Sedona VC and Angel Conference


On December 1, FundingPost will host a panel discussion with local Angel Investors and Venture Capitalists at its "Sedona VC and Angel Conference," sponsored by the Sedona Rouge Hotel & Spa. FundingPost has organized 180+ sold-out venture events over the past 10 years. Leading Venture Capital and Angel Investors are set to speak and coach entrepreneurs at the FundingPost Sedona event on December 1, at the Sedona Rouge Hotel & Spa.

Local Venture Firms will gather at FundingPost's upcoming event to discuss the trends in Early-Stage Investing, hot sectors, sectors that these Angels and VCs look at, things that are most important to them when they are considering an Investment, the best and worst things an entrepreneur can do to get their attention, additional advice for entrepreneurs, and, of course, the best ways to reach these and other Investors.

• Rick Gibson, Angel Investor, Desert Angels;
• Michael Wolf, Angel Investor, Lobodos Ventures;
• Peter Shaw, Principal, Shaw Management Advisors LLC (SMAI);
• Tom Kuegler, Managing Partner, Wasabi Ventures.

“We are excited about returning to the Sedona area. It’s a fantastic opportunity for an early-stage company to meet face to face with investors,” said Joe Rubin, Director, FundingPost. “Early-stage VCs are always on the lookout for great ideas, and FundingPost is proud to provide a forum for these investors to locate promising new ventures. We hear new success stories from companies raising capital at our events all the time!”

As with all FundingPost events, there will be pitching and plenty of networking time for the entrepreneurs to meet the investors during the cocktail party! There is still space available, but the seating is limited!

About FundingPost

With over 10,000 CEOs and 700 Venture Capital Funds attending events in 20 cities nationwide; a Printed Dealflow Magazine; and a deal-exchange website with over 7,700 VC and Angel Investor members and over 138,000 companies, that has, on average, made an introduction of an Investor to an Entrepreneur every business day since its inception; FundingPost believes that it is important to reach investors in every medium possible - both online and offline.

Monday, November 21, 2011

Diversity Increases Among Newer Venture Capital Professionals


Gender Composition of Industry Remains Largely Unchanged

NVCA and Dow Jones VentureSource Release 2011 Venture Census Data

The National Venture Capital Association (NVCA) and Dow Jones VentureSource today released the results of the 2011 Venture Census survey which examines the demographic composition of the U.S. venture capital industry. Among the findings are signs of increasing ethnic diversity, especially among newer professionals, an investor base comprised mostly of men, and a loyal and stable workforce as almost half the respondents expect to be in the same role at the same firm in five years.

Conducted for the first time in 2008, this year’s Venture Census comprised responses from nearly 600 professionals in both investment roles and administrative functions such as chief financial officers and marketing and communications professionals.

Gender Composition

While 79 percent of the survey respondents were male and 21 percent were female, women were less likely to hold investment roles. Of those who identified themselves as investors, 89 percent were male and 11 percent were female. In 2008, when measured slightly differently, 86 percent of investors were male and 14 percent were female.

The life sciences and clean technology industries had the highest percentage of women investors at 18 percent and 15 percent respectively. Information technology (IT) followed with women representing 12 percent of business-to-business IT investors and 11 percent of consumer IT investors. The lowest percentage of women investors was in the non-high tech products and services sector at eight percent.

Of those respondents who were administrative professionals, 62 percent were women and 38 percent were men. The CFO position was split nearly evenly, comprised of 53 percent women and 47 percent men. The percentage of women in the industry was inversely proportional to the age ranges. Of respondents under 30 years old, 28 percent were women. Of those in their 30s, 27 percent were women; 40s and 50s, 22 percent; and over 60 years old, 13 percent.

Ethnicity and Nationality

The 2011 survey suggests that the venture industry is becoming more diverse, particularly among the newer professionals. Of the total 2011 respondents, 87 percent were Caucasian, nine percent were Asian, two percent were African American or Latino, and two percent were of mixed race. This compares to 2008 when 88 percent of all venture professionals were Caucasian, eight percent were Asian, and two percent were Hispanic and one percent were African-American.

Venture professionals who have been in the industry fewer than five years showed greater diversity: 77 percent were Caucasian, 17 percent were Asian, three percent were African American or Latino and three percent were of mixed race. In 2008, 82 percent of those with fewer than five years in the industry were Caucasian. With regards to nationality, 95 percent of the 2011 respondents were American; two percent were from Europe, one percent from Canada and one percent from Asia. In 2011, 11 percent of the respondents immigrated to the United States, a drop from 13 percent in 2008.

Work Life

Venture capitalists say they work long hours and travel regularly. Forty-four percent of those in investment roles report working more than 60 hours per week and nine percent travel more than eight nights per month. Professionals in administrative roles log fewer hours with 13 percent working more than 60 hours each week and one percent traveling more than eight nights per month.

Venture professionals tend to remain loyal to their firms. Fifty-seven percent of respondents have worked at one VC firm and 30 percent at two firms. When asked where they expect to be in five years, 49 percent of respondents expected to be at the same firm in the same role, 16 percent expected to be at the same firm in a new role and 10 percent planned to be at a new role at a new firm. Eight percent of the respondents expect to be retired of which 83 percent were over 55 years old.

Stability within the venture capital workforce comes mainly from mid-career professionals with more of the youngest and oldest groups looking to exit the asset class. In the next five years, 27 percent and 46 percents of respondents in their 20s and over 60 years old respectively plan to leave the venture industry. These figures compare to 9 percent of venture professionals in their 30s who plan to exit the asset class, 13 percent in their 40s and 19 percent in their 50s. When it comes to social media, venture professionals are most committed to LinkedIn with 85 percent identifying themselves as users. Sixty-two percent use Facebook and 30 percent use Twitter. While 33 percent read blogs, only 11 percent write them. Ninety one percent of blog writers are investors.

Eighty-one percent of respondents are married and 75 percent have children.

Education and Background

The top universities attended by the 2011 respondents were Stanford and Harvard (both at 10 percent), University of Pennsylvania (eight percent), University of California - Berkeley (five percent), MIT (four percent) and Duke, Northwestern, University of Michigan, Yale, and Columbia (each at three percent). In 2008 the top universities attended were Harvard (12 percent), Stanford (nine percent), University of Pennsylvania (eight percent), Duke (five percent) and MIT (five percent). The most common undergraduate degree earned by the respondents was in economics at 21 percent, followed by business administration at 16 percent and mechanical or electrical engineering at 13 percent. Nine percent of respondents have PhDs and 70 percent have master’s degrees. The MBA is the most prevalent degree with 49 percent earning the distinction. In 2008, 64 percent of those surveyed had master’s or PhD degrees.

The survey showed that venture capitalists have diverse employment backgrounds. Fifteen percent of investors were once a CEO or founder of a venture-backed start-up and 14 percent were the CEO of a private (non-venture-backed) or public company. Forty-four percent were employees at public companies, 28 percent worked at private (non-venture-backed) companies and 25 percent worked at venture-backed startups. Twenty-six percent were consultants, 20 percent were investment bankers, nine percent were scientists and five percent were attorneys.


Friday, November 11, 2011

Venture Investment Into U.S. Companies Rises in Third Quarter of 2011

Dow Jones VentureSource: Early-stage investing picks up; Capital pours into consumer Internet companies; Healthcare and IT industries a mixed bag

Investors put $8.4 billion into 765 deals for U.S.-based venture companies during the third quarter of 2011, a 29% increase in investment and 8% increase in deals from the same period last year, according to Dow Jones VentureSource. The median amount raised for a round of financing during the third quarter was $6 million, up from the $5 million median a year earlier.

“Venture investment rose in the third quarter, putting the industry on pace to near pre-recession investment levels by the end of the year,” said Jessica Canning, global research director for Dow Jones VentureSource. “While it’s unclear how long venture capitalists can continue at this pace given the weak fund-raising and difficult exit environments, the increase in deal activity, especially among early-stage start-ups, shows VCs are optimistic they will be able to support the next generation of start-ups.”

Medical Device Companies Raise More Than Biopharmaceuticals for First Time Since 1998

In the third quarter, Medical Device companies raised more venture financing than Biopharmaceutical companies for the first time since 1998. Sixty-eight Medical Device deals raised $857 million, a 15% rise in deal activity and 30% increase in capital invested from the same period last year. In the Biopharmaceuticals sector, 78 deals raised $715 million, a drop in capital invested from the year-ago period when 71 deals raised $865 million.

“Although the Biopharmaceuticals sector lost its long-held place as the leader of the Healthcare industry, early-stage investment was strong, showing that investors are building a pipeline,” according to Ms. Canning. “In Medical Devices, investments were weighted toward the later-stage deals, which could be a result of concerns over the clarity of the FDA’s requirements weighing more heavily on device investors.”

Forty-two percent of Biopharmaceuticals deals went to early-stage companies and 26% of Medical Device deals went to early-stage companies.

Medical IT companies maintained the strong investment numbers seen over the last year as 24 deals raised $207 million, not far from the same period last year when 24 deals collected $182 million.

Overall, the Healthcare industry raised $1.9 billion for 184 deals, an 11% decline in capital invested and 9% increase in deal flow.

Capital Pours Into Consumer Internet Companies

Consumer Information Services, which includes online search, entertainment and social media companies, raised $1.3 billion for 104 deals during the third quarter, more than double the financing collected for 94 deals during the same period last year. Having collected $3.8 billion throughout the first three quarters of 2011, the sector is on pace to exceed the $4.2 billion companies raised in 2010.

“VCs are actively funding new Consumer Internet companies and pouring significant amounts of capital into later-stage deals, but second rounds are lagging,” said Scott Austin, editor of Dow Jones VentureWire. “If investors continue focusing on later-stage companies that would likely have exited years ago had market conditions been better, the hundreds of young Web start-ups that raised financing in the last two years will face intense competition for second rounds.”

Within the Consumer Internet sector, deal activity for young start-ups was strong as 57% of deals were seed- or first-rounds. While 30% of deals went to later-stage companies, these companies accounted for $1 billion of the $1.3 billion companies in the sector collected. Thirteen percent of deals were second rounds.

Software Keeps Investments Flowing in IT

Companies in the Information Technology industry raised $2.1 billion for 227 deals in the third quarter, a 9% increase in financing but 7% drop in deal flow. The Software sector continued to be a bright spot for IT and collected the lion’s share of investment as 165 deals collected $1.3 billion. While investments in the Semiconductors and Hardware sectors declined, deal flow for Communications and Networking companies showed some strength as 25 deals raised $354 million, up from 22 deals that raised $246 million in the same period last year.

Investment in Enterprise and Energy Start-Ups Strong

While deal flow for Business and Financial Services companies rose 7%, capital invested spiked 65% as 139 deals collected $1.5 billion. The industry’s most active investment area was Business Support Services, which is driven by interest in marketing, advertising and data management companies. Business Support Services start-ups raised $1.2 billion for 104 deals in the most recent quarter.

The Energy and Utilities industry raised $635 million for 33 deals, an increase from the same period last year when 23 deals raised $381 million. As usual, Renewable Energy companies claimed almost all of the industry’s investment as 30 deals raised $621 million.

VCs Do More Early-Stage Deals

Seed- and first-rounds accounted for 42% of deals and 21% of capital invested during the third quarter, an uptick in deal activity from the year-ago period when early-stage rounds claimed 36% of deals and 22% of capital raised. Second rounds dropped from 23% of deal activity in the third quarter of 2010 to 20% in the most recent quarter, while the proportion of capital garnered by these deals picked up slightly from 18% last year to 19% in the third quarter of 2011. Later-stage deals accounted for 37% of the quarter’s deals and 58% of total capital raised, a mild change from the same period last year when they accounted for 39% of deals and 57% of capital raised.

For information on Dow Jones VentureSource’s research methodology, visit http://bit.ly/VSFAQs. For general information about Dow Jones VentureSource, visit http://www.dowjones.com/privatemarkets.

Venture Investment Slides in Third Quarter of 2011 as Europe Reports Lowest Deal Count on Record

Dow Jones VentureSource: Investors put €951 million into European venture companies;
Consumer Web and enterprise start-ups buck downward trend

Venture capitalists put €951 million into 219 deals for European companies in the third quarter of 2011, a 12% drop in investment and 13% decline in deal flow over the same period last year, according to Dow Jones VentureSource. This marks the lowest quarterly deal count for Europe since VentureSource began tracking the region in 2000.

“The ongoing European debt crisis, drop in consumer and business confidence and general uncertainty surrounding global economic conditions continue to affect levels of venture capital financing activity in the region significantly,” said Anthony Sheldon, research manager, Dow Jones VentureSource. “With no clear indication of an improving global economic environment, it remains to be seen whether the small gains made this quarter in the consumer and business sectors are a genuine cause for optimism looking forward to 2012.”

The median size of a European venture capital deal was €2 million in the third quarter of 2011, on par with the same period in 2010.

Consumer and Enterprise Service Industries Buck Downward Trend

Consumer Services companies raised €274 million for 39 deals in the third quarter, a 12% increase in investment despite a 26% drop in deal flow.

Within the Consumer Services industry, Consumer Web companies saw a steep decline in deal flow and investment. Consumer Web companies, which include social networking and online entertainment start-ups, raised €104 million for 21 deals, a 33% drop in capital raised and 34% decline in deal activity.

The Business and Financial Services industry also saw an increase in investment despite a drop in deal flow as 26 deals raised €143 million. This represents a 13% decline in deal activity but more than double the capital collected in the same period last year.

Medical Devices Sector Offers a Bright Spot in Healthcare

As more deals for Healthcare companies went to seed and first rounds, which are less capital-intensive than later-stage rounds, investment in the industry declined 27% despite a 10% increase in deal flow. In the third quarter, 56 Healthcare deals raised €262 million.

Within Healthcare, investment in the Medical Devices sector more than doubled to €93 million as deal flow rose 71% to 24 deals.

“In the U.S., medical device investors have been voicing concerns over the clarity of theFood and Drug Administration’s requirements for the approval of devices. This could be pushing some investors to look for opportunities overseas and Europe may be benefiting from that,” said Mr. Sheldon.

As usual, the Biopharmaceuticals sector took the largest share of Healthcare investment, attracting €163 million for 29 deals, a 44% decrease in investment and 9% decline in deal flow.

IT Industry Records Lowest Quarterly Deal Count

The Information Technology industry recorded its lowest quarterly deal count as 63 deals raised €183 million, a 13% drop in deal flow and 31% drop in capital invested. The Software sector continued to be the most popular investment area within IT as 45 deals raised €107 million.

Country Perspectives

The U.K. remained the favorite destination for venture capital investment in Europe, taking 35% of overall investment and 33% of deals. Companies in the U.K raised €336 million for 73 deals, a 4% drop in deal count but a 45% increase in capital raised.
France came in second place in terms of both investment and deal flow as 39 deals raised €189 million, a 36% decrease in deal flow and 38% decline in investment.
Germany came in third as 24 deals raised €81 million. This marks a 26% decline in investment, but deal activity was nearly on par with the same period last year when 23 deals were completed.

Venture Investment in China Climbs in Third Quarter

Dow Jones VentureSource: China-based companies raised $1.3 billion through 89 deals;
IPOs dropped slightly

In the third quarter of 2011, investors put $1.3 billion into 89 deals for venture-backed companies in China, an 84% increase in investment and 19% increase in deal flow over the same period last year, according Dow Jones VentureSource. Through the first three quarters of 2011, venture investment rose though the increase was milder than that seen in the third quarter alone. During the first nine months, $4.4 billion was raised for 236 financing deals, a 13% increase in investment and 6% increase in deal flow over the year-ago period.

Initial public offerings (IPOs) of venture-backed companies dropped slightly in the third quarter as 29 IPOs raised $4.6 billion compared with 33 IPOs that raised $3.9 billion in the same period in 2010.

“With investors on pace to put a record amount of capital into Chinese companies this year, it appears that venture capitalists are focusing on rebuilding the pipeline after seeing a record 140 IPOs in 2010,” said Jessica Canning, global research director for Dow Jones VentureSource.

The median size of a venture capital deal during the third quarter of 2011 was $11.7 million, more than double the $5.1 million median in the same period last year.

Consumer Services: Most Active Industry for Investment, Least Active for Exits

The Consumer Services industry remained the most popular investment area for venture capitalists, a distinction it has held since 2005, despite being one of the least active industries for exits. Forty deals for Consumer Services companies raised $674 million in the third quarter, a significant increase from the same period last year when 22 deals raised $287 million. With two IPOs, Consumer Services tied with Healthcare for the least active industry for IPOs.

Investment in the industry was driven by interest in the Consumer Information Services sector, which includes social media, entertainment and shopping companies. These companies raised $420 million through 23 deals.

Investment & Liquidity Roundup

Industrial Goods and Materials, the most active area for IPOs, saw nine companies go public during the third quarter and 13 financing deals raise $106 million.

Driven by interest in software, Information Technology companies raised $130 million for 15 deals, almost double the number of deals and more than triple the capital raised during the same period last year. The IT industry also saw four IPOs in the third quarter.

Fueled by interest in advertising and marketing companies, the Business and Financial Services industry saw 10 financing deals raise $120 million, a 47% drop in deal flow and 36% drop in capital invested. Four Business and Financial Services companies went public in the third quarter.

In the Consumer Goods industry, nearly as many companies went public as raised capital. Five Consumer Goods financing deals raised $63 million in the third quarter and four companies held IPOs.

For information on Dow Jones VentureSource’s research methodology, visit http://bit.ly/VSFAQs. For general information about Dow Jones VentureSource, visit http://www.dowjones.com/privatemarkets