NVCA Today

Against a backdrop of continued economic concern and public market volatility, NVCA statistics confirm that the US venture capital industry remains open for business. First time financings are fewer, but still occurring. There are far fewer later stage rounds than a year or even two years ago, but this does not mean that those companies have moved on to being acquired or going public. Exits are still on a slow pace. Many of those candidate companies tread water hoping for better markets in the future in which to raise needed capital.

MoneyTree Investment in Companies

Venture capital investment levels have shifted to a new, smaller size band. First quarter 2010 investment was below a $20 billion annual pace.

In 1Q 2010, venture capitalists funded 208 companies for the first time compared with 162 in 1Q 2009. Long time industry run-rate is 1,000 - 1,300 per year.

Fundraising and Commitments

Fundraising, which for all but the most proven and promising firms has been difficult over the past several years, came off of its 2007 post-bubble mini-peak in 2008 with considerable slowing in the last half. Less than half of the 2007 amount was raised in 2009. The slowing continued through the first quarter of 2010. With diminished fundraising opportunities, a number of firms have pushed off their intention of raising additional funds until later this year.

While the industry does have capital on hand, an ever-increasing portion of that is earmarked for follow-on investment in existing portfolio companies. A prolonged fundraising drought could make future investment difficult.

IPO Draught Continues As Later Stage Companies Consider 2010 Strategies

While up from the IPO run rate of recent quarters, venture-backed IPOs continue at a mere trickle of what is needed to provide the necessary liquidity for the current crop of companies reaching maturity much less resolve the backlog of later stage companies which have been waiting for an exit.

Recent Initial Public Offerings by Venture-Backed Companies

As of May 18, 2010 there were 46 venture-backed companies in registration to go public. At the end of Q2 2009 there were just 10 companies in registration to go public.

M&A Activity

There were only 272 acquisitions in 2009 – a post-bubble low. While the number of deals in Q1 was up overall, the number of deals with disclosed values and the strength of those values continued to be under pressure.

Where to Go for the Latest Transaction Statistics

Quarterly transaction statistics are posted on the NVCA website under industry statistics on the home page and at http://www.nvca.org/index.php?option=com_content&view=article&id=78&Itemid=102. You can also find supplemental charts and commentary at NVCAccess at http://nvcaccess.nvca.org/.