U.S. Venture Capital Fund-Raising Continues Decline in 2010, Hits Seven-Year Low
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Late-Stage Funds Saw a Substantial Jump
Recent improvement in the exit markets has not enticed limited partners (LPs), still haunted by the industry’s lackluster returns over the last decade, back to venture funds. In 2010, U.S. Venture Capital fund-raising fell to a seven-year low as firms raised $11.6 billion across 119 funds, a 14% drop from the $13.5 billion collected by 133 funds in 2009, according to figures from Dow Jones LP Source. In the fourth quarter, 15 funds raised $2.4 billion, a 48% drop from the same period last year.
Across the U.S. private-equity spectrum, which includes venture funds, 336 funds raised $86 billion in 2010, down 16% from 2009. (See detailed PE breakout.)
“Only the best fund managers are raising capital, and even some of those firms are forced to downsize in line with a smaller exit expectations,” Scott Austin, editor of Dow Jones VentureWire, said. “As a result, we expect to see a continued shakeout in the venture industry.”
Dow Jones LP Source classifies multiple fund closings (first, interim, final) separately, based on the year of the closing, to provide an accurate view of the annual fund-raising environment.
Late-Stage Funds See Increase
Both early-stage and multi-stage funds continued to decline in 2010; however, late-stage funds saw an increase. Eight late-stage funds raised $1.5 billion in 2010, a 68% jump from the $887 million raised by nine funds in 2009. In the fourth quarter, late-stage funds raised $390 million, nearly tripling the amount raised during the same period last year.
Multi-stage funds accounted for the majority of venture funds raised, as 38 funds collected $5.4 billion, down 26% from last year. It has become apparent that LPs are growing more selective, both with the funds they invest in and the amount of capital they invest in the asset class. In response, many firms are downsizing their funds. For example, Menlo Ventures closed on $400 million for its eleventh fund, one–third the size of its 2005–vintage predecessor.
Seventy-three early-stage funds collected $4.8 billion, a 12% drop from last year’s total. Some of this early-stage capital was raised by super angels turned venture capitalists. In the fourth quarter, Andreessen Horowitz, a firm founded by Marc Andreessen and Ben Horowitz, raised a $650 million fund, its second fund in two years. Former Google executive Aydin Senkut founded Felicis Ventures, which raised a $40 million fund last year.
Thursday, January 13, 2011
Wednesday, January 5, 2011
More on proposed investment adviser SEC registration exemptions
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The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) repealed the exemption from registration under the Investment Advisers Act of 1940 (Advisers Act) that was frequently utilized by advisers to private equity funds, hedge funds and venture capital funds: the so-called “15 client” exemption. The Dodd-Frank Act also provided a much narrower registration exemption under the Advisers Act for such advisers and authorized the Securities and Exchange Commission (the Commission) to prepare implementing regulations for the new limited exemptions. Recently proposed regulations reflect the Commission’s effort to further define the exemptions applicable to: (i) advisers solely to venture capital funds, without regard to the number of such funds advised by the advisor or the size of such funds; (ii) advisers solely to “private funds” with less than $150 million in assets under management in the United States, without regard to the number or type of private funds advised; and (iii) non-U.S. advisers with less than $25 million in aggregate assets under management from U.S. clients and private fund investors and fewer than fifteen such clients and investors.
Venture Capital Fund Advisers
Proposed regulation 203(1)-(1) defines the terms “venture capital fund” and “pre-existing venture capital fund.” A venture capital fund is a “private fund” that:
* invests in equity securities of private companies in order to provide operating and business expansion capital and at least 80 percent of each such company’s securities owned by the fund must be acquired directly from the company;
* directly, or through its investment advisers, offers or provides significant managerial assistance to, or controls, each portfolio company;
* does not borrow or otherwise incur leverage;
* does not regularly offer its investors redemption or other similar liquidity rights;
* represents itself as a venture capital fund to investors; and
* is not registered under the Investment Company Act and has not elected to be treated as a business development company.
In addition to exempting from federal registration all advisers providing advice solely to venture capital funds fitting the definition above, the proposed regulations also grandfather advisers to certain pre-existing venture capital funds (a term also defined in the proposed regulations).
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) repealed the exemption from registration under the Investment Advisers Act of 1940 (Advisers Act) that was frequently utilized by advisers to private equity funds, hedge funds and venture capital funds: the so-called “15 client” exemption. The Dodd-Frank Act also provided a much narrower registration exemption under the Advisers Act for such advisers and authorized the Securities and Exchange Commission (the Commission) to prepare implementing regulations for the new limited exemptions. Recently proposed regulations reflect the Commission’s effort to further define the exemptions applicable to: (i) advisers solely to venture capital funds, without regard to the number of such funds advised by the advisor or the size of such funds; (ii) advisers solely to “private funds” with less than $150 million in assets under management in the United States, without regard to the number or type of private funds advised; and (iii) non-U.S. advisers with less than $25 million in aggregate assets under management from U.S. clients and private fund investors and fewer than fifteen such clients and investors.
Venture Capital Fund Advisers
Proposed regulation 203(1)-(1) defines the terms “venture capital fund” and “pre-existing venture capital fund.” A venture capital fund is a “private fund” that:
* invests in equity securities of private companies in order to provide operating and business expansion capital and at least 80 percent of each such company’s securities owned by the fund must be acquired directly from the company;
* directly, or through its investment advisers, offers or provides significant managerial assistance to, or controls, each portfolio company;
* does not borrow or otherwise incur leverage;
* does not regularly offer its investors redemption or other similar liquidity rights;
* represents itself as a venture capital fund to investors; and
* is not registered under the Investment Company Act and has not elected to be treated as a business development company.
In addition to exempting from federal registration all advisers providing advice solely to venture capital funds fitting the definition above, the proposed regulations also grandfather advisers to certain pre-existing venture capital funds (a term also defined in the proposed regulations).
Monday, January 3, 2011
[x+1] Raises $10 Million in Funding Round Led By Intel Capital
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Online targeting platform leader [x+1] announced today it has closed a $10 million Series B funding round led by Intel Capital, the global investment organization of Intel Corp. Existing investors Advanced Technology Ventures, Blue Chip Venture Company and Hudson Venture Partners also participated. The funding will be used to support [x+1]’s growth initiatives centered on its digital marketing hub, which empowers multi-channel audience targeting at scale.
“[x+1] has set the standard for excellence in end-to-end digital media targeting technology,” said Lisa Lambert, Vice President of Intel Capital. “We are excited to work with [x+1] to accelerate the adoption of their media software services and to expand their international reach.”
“Intel Capital’s investment reflects our ability to continually expand our client base among marketers and agencies and to develop new breakthrough solutions that deliver measurable results,” said John Nardone, [x+1]'s chairman and CEO. “We are now in a great position to expand our growth initiatives. 2011 will be a big year for us, and for our major Fortune 500 clients to improve the scale, performance and cost-effectiveness of their online marketing initiatives.”
Recent significant enhancements to [x+1]’s leading digital marketing hub empower customer contact strategies by synchronizing their messages anywhere people are accessing the internet, including websites, landing pages, email, video and mobile.
About [x+1]
[x+1], the online targeting platform leader, maximizes the return on marketing investment ROI) of websites and digital media using its patented targeting technology. Providing the first end-to-end Digital Marketing Hub for advertisers and agencies, it optimizes engagement rates and lift conversion in both media and on websites. Its predictive marketing solutions enable automated, real-time decision making and personalization so the right advertisement and content is delivered to the right person at the right time. Top companies in financial services, telecommunications, online services and travel have significantly increased the performance of their digital marketing using the services of [x+1]. The company is headquartered in New York City. For more information, visit www.xplusone.com;
Intel Capital, Intel’s global investment organization, makes equity investments in innovative technology start-ups and companies worldwide. Intel Capital invests in a broad range of companies offering hardware, software and services targeting enterprise, home, mobility, health, consumer Internet, semiconductor manufacturing and cleantech. Since 1991, Intel Capital has invested more than US$9.7 billion in over 1,100 companies in 48 countries. In that timeframe, 189 portfolio companies have gone public on various exchanges around the world and 258 were acquired or participated in a merger. In 2009, Intel Capital invested US$327 million in 107 investments with approximately 50 percent of funds invested outside the U.S. and Canada. For more information on Intel Capital and its differentiated advantages, visit www.intelcapital.com.
Online targeting platform leader [x+1] announced today it has closed a $10 million Series B funding round led by Intel Capital, the global investment organization of Intel Corp. Existing investors Advanced Technology Ventures, Blue Chip Venture Company and Hudson Venture Partners also participated. The funding will be used to support [x+1]’s growth initiatives centered on its digital marketing hub, which empowers multi-channel audience targeting at scale.
“[x+1] has set the standard for excellence in end-to-end digital media targeting technology,” said Lisa Lambert, Vice President of Intel Capital. “We are excited to work with [x+1] to accelerate the adoption of their media software services and to expand their international reach.”
“Intel Capital’s investment reflects our ability to continually expand our client base among marketers and agencies and to develop new breakthrough solutions that deliver measurable results,” said John Nardone, [x+1]'s chairman and CEO. “We are now in a great position to expand our growth initiatives. 2011 will be a big year for us, and for our major Fortune 500 clients to improve the scale, performance and cost-effectiveness of their online marketing initiatives.”
Recent significant enhancements to [x+1]’s leading digital marketing hub empower customer contact strategies by synchronizing their messages anywhere people are accessing the internet, including websites, landing pages, email, video and mobile.
About [x+1]
[x+1], the online targeting platform leader, maximizes the return on marketing investment ROI) of websites and digital media using its patented targeting technology. Providing the first end-to-end Digital Marketing Hub for advertisers and agencies, it optimizes engagement rates and lift conversion in both media and on websites. Its predictive marketing solutions enable automated, real-time decision making and personalization so the right advertisement and content is delivered to the right person at the right time. Top companies in financial services, telecommunications, online services and travel have significantly increased the performance of their digital marketing using the services of [x+1]. The company is headquartered in New York City. For more information, visit www.xplusone.com;
Intel Capital, Intel’s global investment organization, makes equity investments in innovative technology start-ups and companies worldwide. Intel Capital invests in a broad range of companies offering hardware, software and services targeting enterprise, home, mobility, health, consumer Internet, semiconductor manufacturing and cleantech. Since 1991, Intel Capital has invested more than US$9.7 billion in over 1,100 companies in 48 countries. In that timeframe, 189 portfolio companies have gone public on various exchanges around the world and 258 were acquired or participated in a merger. In 2009, Intel Capital invested US$327 million in 107 investments with approximately 50 percent of funds invested outside the U.S. and Canada. For more information on Intel Capital and its differentiated advantages, visit www.intelcapital.com.
VENTURE-BACKED ACQUISITIONS BREAK ALL-TIME ANNUAL RECORD;
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NUMBER OF IPOS AT HIGHEST QUARTERLY LEVEL SINCE 2000
Venture-backed company exit activity was driven by a record-breaking M&A market and the biggest quarter for IPOs since the third quarter of 2000, according to the Exit Poll report by Thomson Reuters and the National Venture Capital Association (NVCA). The fourth quarter ended with 32 venture-backed IPOs, more than double the number of IPOs seen during the third quarter of 2010 The quarterly volume was driven by 17 Chinese companies funded by U.S. venture capital funds that went public on US exchanges. For full-year 2010, there were 72 venture-backed IPOs, the biggest year for activity since 2004. Over 400 acquisitions were completed during full year 2010, the biggest year, by number of deals, for venture-backed M&A exits since records began in 1985.
“In 2010 we moved from "abysmal to viable" in the venture-backed IPO market,” said Mark Heesen, president of the NVCA. “The number of offerings has improved in large part due to Chinese venture-backed companies going public on U.S. exchanges. We would like to see U.S. company IPOs grow at this pace in the coming year.”
“The record acquisition level illustrates a recognition by larger corporations that there is considerable innovation within these venture-backed companies, while VCs and founders are acknowledging the acquisition as the smoother exit,” continued Heesen. “However, volume is not the only important measure of the health of the venture exit market. We are pleased to see improvements in IPO performance and acquisition prices at the end of 2010 as well. We believe this momentum will continue in 2011 and look forward to better returns.”
IPO Activity Overview
There were 32 venture-backed IPOs valued at $3.6 billion in the fourth quarter of 2010, almost three times the number of IPOs seen during full year of 2009. Seventeen of the fourth quarter offerings were Chinese based venture-backed companies. The offerings spanned a diverse set of industries.
Half of the 32 IPO exits for the quarter were outside of Information Technology and Life Sciences, accounting for a total of $1.7 billion. Beijing, China-based SinoTech Energy, Ltd. (CTE), a provider of enhanced oil recovery services, was the largest offering outside of technology and life sciences, raising $167.8 million on NASDAQ.
FleetCor Technologies (FLT), a provider of credit card processing solutions for the business fleet marketplace based in Norcross, Georgia, began trading on December 15th and raised $291.5 million, marking the largest venture-backed IPO of the quarter.
For the full year 2010, 26 number of companies listed on the New York Stock Exchange (NYSE) and 46 listed on the NASDAQ stock exchange.
Of the 32 IPOs in the fourth quarter, 20 were trading at or above their offering prices as of 12/31/2010. 42 venture-backed companies are currently filed for an initial public offering with the SEC.
Mergers and Acquisitions Overview
As of December 31, 2010, 88 venture-backed M&A deals were reported for the fourth quarter, 36 which had an aggregate deal value of $5.7 billion. The average disclosed deal value was $157.7 million up 18 percent from Q3 2010. Fourth quarter volume marks a 21 percent decrease from the third quarter of 2010, but brings the total number of venture-backed M&A exits to 420 – the largest full year for M&A exits since records began in 1985. The previous record was set in 2007, when 380 venture-backed companies were sold.
The information technology sector led the venture-backed M&A landscape, with 72 deals and a disclosed total dollar value of $2.8 billion. Within this sector, internet specific and computer software companies accounted for the bulk of the targets with 32 and 21 transactions, respectively, across these sector subsets.
In the biggest venture-backed deal of the quarter, HealthSpring Inc acquired Bravo Health, Inc, a Baltimore, Maryland-based provider of healthcare services, for $545.0 million.
Deals bringing in the top returns, those with disclosed values greater than four times the venture investment, accounted for 45 percent of the total during full year 2010. Venture-backed M&A deals returning less than the amount invested accounted for 22 percent of the annual total.
More details here
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NUMBER OF IPOS AT HIGHEST QUARTERLY LEVEL SINCE 2000
Venture-backed company exit activity was driven by a record-breaking M&A market and the biggest quarter for IPOs since the third quarter of 2000, according to the Exit Poll report by Thomson Reuters and the National Venture Capital Association (NVCA). The fourth quarter ended with 32 venture-backed IPOs, more than double the number of IPOs seen during the third quarter of 2010 The quarterly volume was driven by 17 Chinese companies funded by U.S. venture capital funds that went public on US exchanges. For full-year 2010, there were 72 venture-backed IPOs, the biggest year for activity since 2004. Over 400 acquisitions were completed during full year 2010, the biggest year, by number of deals, for venture-backed M&A exits since records began in 1985.
“In 2010 we moved from "abysmal to viable" in the venture-backed IPO market,” said Mark Heesen, president of the NVCA. “The number of offerings has improved in large part due to Chinese venture-backed companies going public on U.S. exchanges. We would like to see U.S. company IPOs grow at this pace in the coming year.”
“The record acquisition level illustrates a recognition by larger corporations that there is considerable innovation within these venture-backed companies, while VCs and founders are acknowledging the acquisition as the smoother exit,” continued Heesen. “However, volume is not the only important measure of the health of the venture exit market. We are pleased to see improvements in IPO performance and acquisition prices at the end of 2010 as well. We believe this momentum will continue in 2011 and look forward to better returns.”
IPO Activity Overview
There were 32 venture-backed IPOs valued at $3.6 billion in the fourth quarter of 2010, almost three times the number of IPOs seen during full year of 2009. Seventeen of the fourth quarter offerings were Chinese based venture-backed companies. The offerings spanned a diverse set of industries.
Half of the 32 IPO exits for the quarter were outside of Information Technology and Life Sciences, accounting for a total of $1.7 billion. Beijing, China-based SinoTech Energy, Ltd. (CTE), a provider of enhanced oil recovery services, was the largest offering outside of technology and life sciences, raising $167.8 million on NASDAQ.
FleetCor Technologies (FLT), a provider of credit card processing solutions for the business fleet marketplace based in Norcross, Georgia, began trading on December 15th and raised $291.5 million, marking the largest venture-backed IPO of the quarter.
For the full year 2010, 26 number of companies listed on the New York Stock Exchange (NYSE) and 46 listed on the NASDAQ stock exchange.
Of the 32 IPOs in the fourth quarter, 20 were trading at or above their offering prices as of 12/31/2010. 42 venture-backed companies are currently filed for an initial public offering with the SEC.
Mergers and Acquisitions Overview
As of December 31, 2010, 88 venture-backed M&A deals were reported for the fourth quarter, 36 which had an aggregate deal value of $5.7 billion. The average disclosed deal value was $157.7 million up 18 percent from Q3 2010. Fourth quarter volume marks a 21 percent decrease from the third quarter of 2010, but brings the total number of venture-backed M&A exits to 420 – the largest full year for M&A exits since records began in 1985. The previous record was set in 2007, when 380 venture-backed companies were sold.
The information technology sector led the venture-backed M&A landscape, with 72 deals and a disclosed total dollar value of $2.8 billion. Within this sector, internet specific and computer software companies accounted for the bulk of the targets with 32 and 21 transactions, respectively, across these sector subsets.
In the biggest venture-backed deal of the quarter, HealthSpring Inc acquired Bravo Health, Inc, a Baltimore, Maryland-based provider of healthcare services, for $545.0 million.
Deals bringing in the top returns, those with disclosed values greater than four times the venture investment, accounted for 45 percent of the total during full year 2010. Venture-backed M&A deals returning less than the amount invested accounted for 22 percent of the annual total.
More details here
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Thursday, December 30, 2010
‘Jobs Bill’ Provision Triggering $72 Million Investment in Connecticut Companies
Expanded Tax Credit Program Creates New Fund for Growing Firms
Governor M. Jodi Rell has announced that a key provision of the bipartisan Jobs Bill is triggering a $72 million investment in at least 25 Connecticut small businesses, helping to create jobs, spur innovation and strengthen the state’s economy.
Advantage Capital Partners is the first venture capital and small business finance firm to be certified as a fund manager under the newly revised Insurance Reinvestment Tax Credit program, which was updated as part of the Jobs Bill. The program leverages private capital provided by insurance companies that is then invested by state-certified fund managers.
The Jobs Bill – passed by the Legislature in the waning days of the regular session – is a sweeping, bipartisan package that offers incentives for employers, supports small business and emerging industries, provides resources for tuition and training, helps manufacturers find efficiencies and includes accountability measures to safeguard state taxpayer dollars. The bill was the product of cooperative efforts Governor Rell began in the first leadership meeting of the legislative session.
“As I have traveled the state, one of the top concerns I have heard – especially as the economy has struggled – has been the lack of access to capital, especially risk capital for new ventures with considerable start-up costs but high growth potential,” Governor Rell said. “With the changes that we made to the Insurance Reinvestment Tax Credit program, there will be a much-needed infusion of investment dollars into our state to support business formation and growth, as well as strengthen our high-tech work force. I expect that this program will be paying important economic dividends for years to come.”
Advantage Capital Partners, a group of venture capital partnerships that has raised more than $1.3 billion since 1992, has raised $72 million for investment in Connecticut-based companies. The firm provides equity and debt capital, along with value-added counsel and other support, to operating businesses that have the potential for excellent investor returns as well as significant community impact.
For the Connecticut fund, Advantage Capital has partnered with Ironwood Capital, an Avon-based investment management firm focused on private equity, mezzanine and senior debt investments. Ironwood Capital will identify, underwrite and manage these investments.
Advantage Capital’s fund will identify promising debt and equity investment opportunities in everything from seed-stage through mature but growing companies.
“Advantage Capital Partners is committed to fostering the growth of small businesses in Connecticut,” said Steven T. Stull, President of Advantage Capital Partners. “Our firm has a strong track record of raising private capital for investments which promote economic opportunity, enable job creation and retention, and contribute to a robust investment climate. We look forward to working with the State of Connecticut and with Ironwood Capital to accomplish these important goals.”
The revamped Insurance Reinvestment Tax Credit program now allows fund managers to invest in any Connecticut-based business, not just insurance-related companies. Twenty-five percent of the investments must be committed to green technology efforts, while 3 percent must go toward pre-seed investments.
“The passage of the jobs bill earlier this year was a momentous occasion for Connecticut,” said Joan McDonald, DECD commissioner and Connecticut Innovations board chair. “It provided a host of new incentives and resources for businesses to boost investment and create jobs across all industry sectors. The changes made to the Insurance Reinvestment Tax Credit program, most notably in the pre-seed area, are another important building block in our efforts to move to an innovation-based economy.”
To learn more about the Advantage Capital Connecticut fund, please contact Victor Budnick at (860) 409-2108 or John Strahley at (860) 409-2106. Companies seeking capital can submit requests for funding via email to icc@ironwoodcap.com.
Governor M. Jodi Rell has announced that a key provision of the bipartisan Jobs Bill is triggering a $72 million investment in at least 25 Connecticut small businesses, helping to create jobs, spur innovation and strengthen the state’s economy.
Advantage Capital Partners is the first venture capital and small business finance firm to be certified as a fund manager under the newly revised Insurance Reinvestment Tax Credit program, which was updated as part of the Jobs Bill. The program leverages private capital provided by insurance companies that is then invested by state-certified fund managers.
The Jobs Bill – passed by the Legislature in the waning days of the regular session – is a sweeping, bipartisan package that offers incentives for employers, supports small business and emerging industries, provides resources for tuition and training, helps manufacturers find efficiencies and includes accountability measures to safeguard state taxpayer dollars. The bill was the product of cooperative efforts Governor Rell began in the first leadership meeting of the legislative session.
“As I have traveled the state, one of the top concerns I have heard – especially as the economy has struggled – has been the lack of access to capital, especially risk capital for new ventures with considerable start-up costs but high growth potential,” Governor Rell said. “With the changes that we made to the Insurance Reinvestment Tax Credit program, there will be a much-needed infusion of investment dollars into our state to support business formation and growth, as well as strengthen our high-tech work force. I expect that this program will be paying important economic dividends for years to come.”
Advantage Capital Partners, a group of venture capital partnerships that has raised more than $1.3 billion since 1992, has raised $72 million for investment in Connecticut-based companies. The firm provides equity and debt capital, along with value-added counsel and other support, to operating businesses that have the potential for excellent investor returns as well as significant community impact.
For the Connecticut fund, Advantage Capital has partnered with Ironwood Capital, an Avon-based investment management firm focused on private equity, mezzanine and senior debt investments. Ironwood Capital will identify, underwrite and manage these investments.
Advantage Capital’s fund will identify promising debt and equity investment opportunities in everything from seed-stage through mature but growing companies.
“Advantage Capital Partners is committed to fostering the growth of small businesses in Connecticut,” said Steven T. Stull, President of Advantage Capital Partners. “Our firm has a strong track record of raising private capital for investments which promote economic opportunity, enable job creation and retention, and contribute to a robust investment climate. We look forward to working with the State of Connecticut and with Ironwood Capital to accomplish these important goals.”
The revamped Insurance Reinvestment Tax Credit program now allows fund managers to invest in any Connecticut-based business, not just insurance-related companies. Twenty-five percent of the investments must be committed to green technology efforts, while 3 percent must go toward pre-seed investments.
“The passage of the jobs bill earlier this year was a momentous occasion for Connecticut,” said Joan McDonald, DECD commissioner and Connecticut Innovations board chair. “It provided a host of new incentives and resources for businesses to boost investment and create jobs across all industry sectors. The changes made to the Insurance Reinvestment Tax Credit program, most notably in the pre-seed area, are another important building block in our efforts to move to an innovation-based economy.”
To learn more about the Advantage Capital Connecticut fund, please contact Victor Budnick at (860) 409-2108 or John Strahley at (860) 409-2106. Companies seeking capital can submit requests for funding via email to icc@ironwoodcap.com.
Tuesday, December 28, 2010
Cleantech venture capital
11 predictions for 2011
by Rob Day, a Partner with Black Coral Capital, based in Boston.
1. The cleantech venture capital shakeout will become more obvious
I haven't seen too much written about this by those outside the industry, mostly because it's been pretty quietly done. But as we've talked about here before, there's been an exodus of investors out of the sector lately. To date, it's been mostly individuals -- either individual VCs leaving their firms, or the "cleantech guy" at diversified firms now being redirected back out of cleantech investing into other sectors. But wearing my limited partner hat, I'm seeing a whole lot of cleantech-specific firms out there or getting ready to go out there and raise new funds. And I just don't think the LP community will be able to support all of them. The big institutional LPs have been shifting away from venture capital as an asset class, and they've become more tepid about cleantech. 2010 saw a stop of any new cleantech venture firms; 2011 will see the shakeout of existing cleantech venture firms. Certainly there are a good number of cleantech-specific funds that previously had been able to raise funds simply on the basis of being cleantech specialists, but who now will be competing against each other for increasingly scarce LP dollars. And (often because of the overall VC category performance, and the lack of VC exits overall over the past decade) many won't have an advantaged track record, and won't have a really differentiated pitch versus their peers. I think it'll be lean times for many of those funds. The firms won't go away, but there may be more obvious slimming of staff as operating budgets go down and the lack of dry powder makes it less necessary to keep staff on. The good news is, given the continued need for experienced senior management at cleantech venture-backed firms, I think a lot of this will be VCs leaving to take operating roles. The other good news is that I think things will continue to get gradually better for cleantech venture fundraising.
See the other 10 predictions here.
by Rob Day, a Partner with Black Coral Capital, based in Boston.
1. The cleantech venture capital shakeout will become more obvious
I haven't seen too much written about this by those outside the industry, mostly because it's been pretty quietly done. But as we've talked about here before, there's been an exodus of investors out of the sector lately. To date, it's been mostly individuals -- either individual VCs leaving their firms, or the "cleantech guy" at diversified firms now being redirected back out of cleantech investing into other sectors. But wearing my limited partner hat, I'm seeing a whole lot of cleantech-specific firms out there or getting ready to go out there and raise new funds. And I just don't think the LP community will be able to support all of them. The big institutional LPs have been shifting away from venture capital as an asset class, and they've become more tepid about cleantech. 2010 saw a stop of any new cleantech venture firms; 2011 will see the shakeout of existing cleantech venture firms. Certainly there are a good number of cleantech-specific funds that previously had been able to raise funds simply on the basis of being cleantech specialists, but who now will be competing against each other for increasingly scarce LP dollars. And (often because of the overall VC category performance, and the lack of VC exits overall over the past decade) many won't have an advantaged track record, and won't have a really differentiated pitch versus their peers. I think it'll be lean times for many of those funds. The firms won't go away, but there may be more obvious slimming of staff as operating budgets go down and the lack of dry powder makes it less necessary to keep staff on. The good news is, given the continued need for experienced senior management at cleantech venture-backed firms, I think a lot of this will be VCs leaving to take operating roles. The other good news is that I think things will continue to get gradually better for cleantech venture fundraising.
See the other 10 predictions here.
Wednesday, December 22, 2010
Women In Venture Capital
High Performance Entrepreneurs: Women in High Tech
New research shows what many have long suspected: women entrepreneurs are poised to lead the next wave of growth in global technology ventures. The full report, prepared by Illuminate Ventures, documents the performance of women entrepreneurs in the past decade and the trends that are propelling them towards critical mass in the high-tech sector. Register to receive the full 15-page paper.
Big Progress in Recent Times: More women are serving as officers of venture-backed companies with successful exits. In 1988, only 4% of the 134 firms that went public in the U.S. had women in top management positions. Of 2009’s 19 high-tech IPOs, all but two had at least one woman officer.
Venture-level Returns: In the past 10 years more than 125 companies with over 200 women co-founders or officers have achieved IPOs or >$50M M&A exits in the U.S. high-tech sector alone.
Impact of Women Investors: Women now represent just over 15 percent of angel investors, but just 5%-7% of partner-level high-tech venture capital investors in the U.S. Firms with women investment partners are 70 percent more likely to lead an investment in a woman entrepreneur than those with only male partners.
The bottom line: More than ever before, women are influencing the face of business. They are on the cusp of becoming a leading entrepreneurial force in technology. As the global economy regenerates, new business models are needed to stimulate economic and job growth. Investors seeking to reinvigorate bottom-line performance and to favorably impact the entrepreneurial strength of our economy would be wise to support strategies that enable high-tech start-ups that are inclusive of women entrepreneurs.
Please Register Here to Receive The Complete Whitepaper
New research shows what many have long suspected: women entrepreneurs are poised to lead the next wave of growth in global technology ventures. The full report, prepared by Illuminate Ventures, documents the performance of women entrepreneurs in the past decade and the trends that are propelling them towards critical mass in the high-tech sector. Register to receive the full 15-page paper.
Big Progress in Recent Times: More women are serving as officers of venture-backed companies with successful exits. In 1988, only 4% of the 134 firms that went public in the U.S. had women in top management positions. Of 2009’s 19 high-tech IPOs, all but two had at least one woman officer.
Venture-level Returns: In the past 10 years more than 125 companies with over 200 women co-founders or officers have achieved IPOs or >$50M M&A exits in the U.S. high-tech sector alone.
Impact of Women Investors: Women now represent just over 15 percent of angel investors, but just 5%-7% of partner-level high-tech venture capital investors in the U.S. Firms with women investment partners are 70 percent more likely to lead an investment in a woman entrepreneur than those with only male partners.
The bottom line: More than ever before, women are influencing the face of business. They are on the cusp of becoming a leading entrepreneurial force in technology. As the global economy regenerates, new business models are needed to stimulate economic and job growth. Investors seeking to reinvigorate bottom-line performance and to favorably impact the entrepreneurial strength of our economy would be wise to support strategies that enable high-tech start-ups that are inclusive of women entrepreneurs.
Please Register Here to Receive The Complete Whitepaper
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