A piece, via WSJ, provides some sobering stats:
There were 844 venture firms investing in U.S. companies last year, 40 fewer than in 2006, according to the latest data from VentureSource, a research unit of VentureWire publisher Dow Jones. That is down 30% from the bubble year of 2000, when there were nearly 1,200 active investors.
The total includes a substantial number of firms–224, or 27% of the total–who didn’t back any new companies last year, an indication that the ranks of active investors will continue to thin.
The post goes on to give some more data about the US-based National Venture Capital Association’s members:
Heesen said he foresees a 15% decline in the next two years in the total number of venture firms investing in the U.S., many of them too small to meet the NVCA’s membership threshold of $5 million under management. The NVCA has about 470 member firms representing 90% of the venture capital under management in the U.S.,
Many of the active investors in 2007 did only a few deals. Less than half–45%–completed four or more investments. And 29% made just one investment.
What does the community think? Is there a sense of slowdown here in India as well?
- Mary Meeker’s 2014 Internet Trends report - May 28, 2014
- Andreessen-Horowitz raises $1.5B for its new fund - February 1, 2012
- WestBridge launches India “evergreen” fund - November 15, 2011
As discussed on this board before, venture capital is an asset class that may be unfair to investors at a broad level. The level of transparency is low, you are parting with 2% of hard earned wealth on an annual basis to pay GPs who don’t have serious tangible accountability (i.e. they share the upside but not the losses), and most importantly your money gets invested subject to tremendous herd mentality. The rate of success and rate of return is not public (unlike mutual or hedge funds) and may be lower in reality than known to the public and media.
Venture capital, especially early stage, stands to be “eaten up” one on end by hedge and PE funds and on the other end by private angel investments by HNIs. Talk to entrepreneurs in India who are trying to raise a < $ 3M round and you’ll see that early stage capital is scarce and many VC firms are confused about what they are trying to do. The US NVCA data is saying the same thing.
No… currently the venture firms investing in india will not slow down… i think it depends on the political and financial stand of the country. And we know that the political and financial stand of US going down… And in the case india, the country is fast developing country… And most of the business needs such a situation… but there is chance of venture industry slowdown here in india… As most of IT companies in india depends US and the IT proffesion in US is coming down due the political and economical situations there, the income of the IT proffesionals in india will decrease… This will effect the entire branded companies and other business (eg:Real Estate which is having high potential in india) pointed to them… and it’ll make the venture industries to think twice before investing…