Tag Archive for 'techcrunch'

VC investments falling off cliff in the US

Published by Udhay Shankar N on April 18, 2009 in Ecosystem and News/ Events.
1 Star2 Stars3 Stars4 Stars5 Stars (1 votes, average: 4 out of 5)
Loading ... Loading ...
 4 Comments

Alok asked earlier about what change in behaviour we’re seeing among VCs. My own sense is that VCs in India are much more cautious than VCs in, say, the US. “No” is always a safe answer. Of course, the “venture” or “risk” part of “Venture Capital” is then drastically downplayed. Nowhere is this more true than in times like these. I have not attempted to gather much data on this impression yet specifically for the Indian market, but I would be surprised to be proved wrong.

Meanwhile, in the US, investments have fallen off a cliff. A post in TechCrunch details just how bad it has been so far this year:

And make no mistake—it’s a steep drop. Venture funding fell by 50% nationally from the first quarter in 2008 to the first quarter of 2009, totaling to $3.9 billion, according to Dow Jones Venture Source. That’s the lowest total since 1998. PricewaterhouseCoopers and the National Venture Capital Association had it falling farther to $3 billion.

Information technology investments fell 53% year-over-year to $1.7 billion—the lowest since 1997, and the lowest volume of deals since 1995. And clean tech? Well so much for that being the future of the U.S. economy: It fell by 74% to a paltry $117 million.

VC investments in Q1 2009

The author also believes that this isn’t just about the recession, and that the VC industry was overdue for a shakeup.

Returns, on the other hand, did go down. And they never really got back up, given the amount invested. But the industry is graded on a ten-year time horizon so that didn’t matter much. Once returns from 1999 and 2000 fall off that scale, it will. Returns will look at or below the S&P 500 for what is supposed to be a niche, high-risk/high-reward asset class. It takes forever to correct because fund cylces are so long, and the asset class is so illiquid. But it won’t go uncorrected, and the witching hour is getting close.

What does this have to do with money going out to startups? VCs are scared for the first time in a long time. There’s no obvious high growth sector of the tech economy, and their investors are hit in nearly every nook and cranny of their portfolios. They’re not sure how to do their jobs anymore when nothing can go public and acquisitions are few and far between.

I suspect, even though the VC industry is so young in India, that the reverberations will be felt here as well.

What is your feel? Any pointers to up to date data for India?

The European Web Community Stands up.

Published by Vijay Anand on April 21, 2008 in Ecosystem and General.
1 Star2 Stars3 Stars4 Stars5 Stars (3 votes, average: 3 out of 5)
Loading ... Loading ...
 6 Comments

Seems like we are not the only set of folks who are wanting to fix the problems we see around us and build a “sustainable” atmosphere around us. There is a post by Ryan who runs FOWA taking a stance against the Web Mission effort that is getting organized by the UK Government and quite a fair list of heavy weights, including Techcrunch. I think this post is important to observe for a couple of reasons.

The striking similarities that we hear from folks around us in:

1. Thinking that the Silicon valley for some reason offers more opportunities.

2. Europe just like India, in most cases, seems to think that you only get funded if you hit the valley. Atleast we aren’t that bad. We have much more easier access to capital.

3. There are folks like FOWA (Future of Web Apps) who are trying to build a vibrant community of users, developers and startups in Europe, very much like how we are working on the same - with arguments that they have “everything that they require right there”

4. There are also people, most of them, who seem to think that the UK companies should be looking into the valley for users and potential exit strategies.

I’ve been working on a post that shows a snapshot of interaction between startups, venture capitals and the markets from across the globe - the valley, Canada, Australia, Europe and India. You’d be surprised how similar most conversations are. Trust me, things are not so hard because we are in India, neither too easy because we are here. We are just facing the same harsh realities as anywhere else. Perhaps the world is flatterning. Huh! who thought I’d agree to that, so easily!

I’ll leave you with this comment by Phil Bradley in that post, which just gets the message home without any explanations:

“The equity gap between seed and series A that plagues the UK will not be resolved if we can’t demonstrate maturity and ability to build profitable businesses.”

That just eerily sounds like the issue we face here.

PS: I haven’t thought through this yet, but I believe this only applies to Internet/Media related startups.