Startup Investment Hits 3.5 Year Low in December, Q1 M&A Slowest Since 1995
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Startup Investment Hits 3.5 Year Low in December, Q1 M&A Slowest Since 1995
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Re: Startup Investment Hits 3.5 Year Low in December, Q1 M&A Slowest Since 1995
#2Even more concerning, on Monday the National Venture Capital Association reported...
But is it concerning? These numbers, in isolation, aren't necessarily an indicator of a Bad Thing. Maybe the cost of founding a startup has dropped to the point that fewer startups are choosing the venture capital route? Maybe more people are bootstrapping, crowd-funding, and funding organic growth from customer revenue?
Re: Startup Investment Hits 3.5 Year Low in December, Q1 M&A Slowest Since 1995
#3Related to mindcrime's comment, with data points updated monthly, there is a lot of volatility in that graph and it's hard to draw conclusions. While having that drastic a drop isn't inspiring news, it could be due to a number of factors. To her credit, Danielle does not add her own causation theories and merely quotes the NVCA's.
My point is that if next month jumps back to a number closer to recent trends, the last month could easily be an outlier.
Now, if there is a continued depressed trend in startup investments over the next six months, one could put forth a convincing case that new tax laws and problems in the Euro-zone (as NVCA suggests) are hurting startup investments.
Re: Startup Investment Hits 3.5 Year Low in December, Q1 M&A Slowest Since 1995
#4Related to mindcrime's comment, with data points updated monthly, there is a lot of volatility in that graph and it's hard to draw conclusions. While having that drastic a drop isn't inspiring news, it could be due to a number of factors. To her credit, Danielle does not add her own causation theories and merely quotes the NVCA's. My point is that if next month jumps back to a number closer to recent trends, the last…
I absolutely agree, and hopefully there is a lag in investment reporting, but I find the fact that the NVCA issued this report to Reuters and it was picked up by the finance press by no one in tech strange as this is certainly of public interest to the startup community. I've attempted to present the information objectively.
Re: Startup Investment Hits 3.5 Year Low in December, Q1 M&A Slowest Since 1995
#5Even more concerning, on Monday the National Venture Capital Association reported... But is it concerning? These numbers, in isolation, aren't necessarily an indicator of a Bad Thing. Maybe the cost of founding a startup has dropped to the point that fewer startups are choosing the venture capital route? Maybe more people are bootstrapping, crowd-funding, and funding organic growth from customer revenue?
I like the optimism, however, you'd expect the same factors would be at play as you move backwards into the past (while funding amounts continued to rise).
I don't think any major event happened around Jul-Sept 2012 (about where it started to trail off) that precipitated significantly cheaper cost of founding a startup.
Re: Startup Investment Hits 3.5 Year Low in December, Q1 M&A Slowest Since 1995
#6> Other possible explanation: people aren’t using Crunchbase as religiously as they used to. We didn’t put our round on Crunchbase. Everyone we care about uses AngelList.
I find this much more likely. A couple years ago Crunchbase seemed to be way more up-to-date than it is now. Reasons probably include: AngelList gaining traction, TechCrunch no longer seems to be as actively updating Crunchbase and isn't including a big "Crunchbase box" at the bottom of each article like they used to.
Re: Startup Investment Hits 3.5 Year Low in December, Q1 M&A Slowest Since 1995
#7Related to mindcrime's comment, with data points updated monthly, there is a lot of volatility in that graph and it's hard to draw conclusions. While having that drastic a drop isn't inspiring news, it could be due to a number of factors. To her credit, Danielle does not add her own causation theories and merely quotes the NVCA's. My point is that if next month jumps back to a number closer to recent trends, the last…
I absolutely agree, and hopefully there is a lag in investment reporting, but I find the fact that the NVCA issued this report to Reuters and it was picked up by the finance press by no one in tech strange as this is certainly of public interest to the startup community. I've attempted to present the information objectively.
It is my impression that NVCA data is... ok at best; ie, there's many times that they don't pick up on stuff till months, maybes years later.
Re: Startup Investment Hits 3.5 Year Low in December, Q1 M&A Slowest Since 1995
#8> Other possible explanation: people aren’t using Crunchbase as religiously as they used to. We didn’t put our round on Crunchbase. Everyone we care about uses AngelList. I find this much more likely. A couple years ago Crunchbase seemed to be way more up-to-date than it is now. Reasons probably include: AngelList gaining traction, TechCrunch no longer seems to be as actively updating Crunchbase and isn't including a…
Even if AngelList data were added I don't think it would account for more than 25,000,000 in a month (about 1% of the investment logged in December) which is a comparably small amount. The bulk of the money comes from Series A, B, C and later stage deals from VCs and I think TechCrunch keeps those updated themselves.
Re: Startup Investment Hits 3.5 Year Low in December, Q1 M&A Slowest Since 1995
#9edit: Dec 2012 was the worst month for VC investment since August 2012
page 10 of this report -- https://www.cbinsights.com/reports/Q4%202012%20Venture%20Cap...
Picking any month or quarter as suggestive of a trend is generally not going to work. Funding #s get skewed wildly by mega-deals (throw in one big clean tech or Groupon type of financing and things look great and if they're missing, not so good). As of late, mega deals to clean tech have been non-existent which has been a drag on numbers overall.
The Q4 2012 #s did show a decline vs the earlier quarters of 2012. The data is here - http://www.cbinsights.com/blog/trends/venture-capital-2012-r...
Re: exits -- again a single quarter doesn't make for a trend.
If we see sluggish investment and funding levels for many quarters, then there may be reason for "concern" although it is probably a healthy purging of the system in our view.
Note: Our company, CB Insights, tracks VC investment flows and exits. We compete against Thomson (the provider of the NVCA data).
Re: Startup Investment Hits 3.5 Year Low in December, Q1 M&A Slowest Since 1995
#10Economics 101: "An increase in supply leads to a decrease in price" The influx(crazy influx) of startups has allowed VCs to invest less an get higher % ownership. You will not see a $40mill color type investment for a long time, at least until we have a shakeout, which we will. Bloomberg West has just added an additional hr to cover the tech industry 10am/3pm. This smells a lot like the hedgefund biz. The startups remaining will be those that test monetization from day one.
Note: I got a downvote, if u going to downvote at least explain why. If can't then don't participate at all because it does not help the community.