February 24, 2014 - In the last installment of this series on venture debt, I wrote about the difference between traditional middle market lenders and “venture lenders” – who provide debt financing to pre-profit companies with little in the way of tangible assets. I also talked about the various financing solutions that venture lenders provide, such as loans that bridge to a startup’s next equity round, provide growth capital for new hires, etc. In this installment, I’ll talk about typical venture debt terms and the implications of each.
February 19, 2014 - In a post written for the Altos Ventures blog and seen on PandoDaily, Anthony Lee breaks down the “Series B Trap” – when a company raises a large VC round (usually at a high valuation) and ramps up spending, but doesn’t achieve promised growth targets because its fundamentals weren’t sound.
February 19, 2014 - There were 3,995 venture capital deals in the US totaling $29.4B in 2013, a 4% annual increase in number of deals and a 7% increase in dollars invested. Deals in Q4 2013 totaled 1,077 with $8.4B invested, which was a 4% increase in deals and 6% increase in dollars over Q3 2013 and represented a 1% increase in deals and 5% increase in dollars on a rolling four quarters basis. First time financings in 2013 represented 33% of deals and 17% of dollars, compared to 33% and 16% in 2012. Consequently, first time financings increased 3% by deals and 14% by dollars year on year.
February 5, 2014 - The 10 year time horizon of the US Venture Capital Index ® by Cambridge Associates LLC continued its improvement in Q3 2013 to 8.58%, approximately one point higher than the three major public indices. While shorter-term performance slightly lags the public indices, longer-term performance significantly exceeds the public markets. As expected, the Late Stage US Venture Capital Index outperforms the Early Stage Index in the shorter hold periods, while the Early Stage Index outperforms over the longer time horizons.
January 22, 2014 - In Q4 2013, 49 US venture capital funds raised $4.9B. While this was the strongest quarter by dollars raised since Q3 2012, 2013 was the weakest annual fundraising period since 2010. Number of funds raised fell 11% from 2012, while dollars raised fell 15%. Average fund size also dropped 4% to $90MM.
January 22, 2014 - In Q4 2013, there were 81 venture backed M&A transactions with $5.3B in disclosed deal value. While disclosed deal value increased this quarter, the number of transactions and total disclosed deal value are down 23% and 35%, respectively, over 2012. However, disclosed deal value is highly dependent on the mix of M&A deals disclosed and the number of deals disclosed is similarly down 31% from 2012.