IPOs coming at week's end from ARMO Biosciences, Menlo Therapeutics; Bolt Threads, Hippo, Apprente raise funds [Silicon Valley Business Journal, Jan 22, 18] Menlo Therapeutics wants to raise $85 million in a U.S. IPO [seekingalpha.com, Jan 16, 18].
In 2017, venture capital firms in the United States dished out $84 billion to 8,000 technology startups and companies, the highest amount of capital seen since the early 2000s, according to an annual industry monitor from the research firm Pitchbook and the National Venture Capital Association. [Seung Lee, San Jose Mercury News,Jan 15, 18]
Tony Hynes, founder and CEO of Precision Valve & Automation (Cohoes, NY; no SBIR, founded 1992), plans to purchase [factory space for $3.9M] and convert the Mechanicville, NY property into an incubator for early-stage manufacturing companies. .... from a CEO whose business grew out of the former Rensselaer Polytechnic Institute incubator 20 years ago [Albany Business Review, Dec 19, 17]
Arch Grants (St Louis, MO), that has distributed more than $6 million in equity-free funding to 114 startups, which in turn have created or retained more than 1,500 jobs and attracted $120 million in follow-on capital. The commmunity has also raised one of the few $100mm Series A funds outside of Silicon Valley. [Silicon Prairie news, Dec 1, 17]
The Texas Medical Center, the largest medical complex in the world, announced the TMC Venture Fund, a $25 million initiative designed to support technologies and early-stage companies to flourish in Houston’s health care ecosystem and further the TMC’s mission to advance health, education and research. Its awardees for 2017: Alleviant Medical (Houston, TX, founded 2017) developing a novel minimally-invasive device to treat congestive heart failure; Briteseed (Chicago, IL; no SBIR, founded 2012) commercializing a new class of smart surgical tools that have artificial-vision assistance; CNSDose (Australia, founded 2015, raised $1M) uses advanced genetic technology to fast-track finding the right antidepressant and dose; Noninvasix (Galveston, TX; no SBIR, founded 2007) developing a patient monitor to directly, accurately and noninvasively measure brain oxygenation in premature babies in the neonatal intensive care unit. [TMC press release, Nov 8, 17]
IPO cash flow. A flood of Chinese companies is driving the biggest world-wide surge of initial public offerings in a decade. More than 1,450 companies globally have gone public so far in 2017, putting this year on track to become the busiest for new listings since 2007, according to Dealogic data through [Nov 10, 17]. Roughly two-thirds of the IPOs were in the Asia-Pacific region. ... But While deal listings have picked up sharply, deal volume [$170 billion] is only the third highest over the past decade and far below the boom years in 2006 and 2007 before the financial crisis. [Steven Russolillo and Corrie Driebusch, Wall Street Journal, Nov 13, 17]
Northwestern Mutual’s new Cream City Venture Capital Fund will provide early stage funding for startups ranging from $100,000 to $250,000 and will provide the new companies with access to additional Northwestern Mutual resources, including advisors, mentors, co-working space and technology. [press release, Oct 30, 17]
Big seeds. A plethora of eight-figure rounds at the earliest stages this year has caught the eye. The companies raising the funds include Romeo Power, Indian insurance technology company Acko and autonomous vehicle startup JingChi, which recently announced a $30 million angel round—on top of a $100 million Series A reportedly in the works. [Sean Lightbown, pitchbook.com, September 26, 2017]
The Engine, a new VC fund in Cambridge, MA aims to bridge that [long lead time] gap by investing in breakthrough technologies that require extensive time and funding. Its [announced] first round of investments consists of seven startups (Analytical Space (Boston, MA, laser satellite data links w former Gen Pete Worden as advisor), Baseload Renewables (co-founded by Professor Yet-Ming Chiang who co-founded A123 Systems), C2Sense (Cambridge, MA; patented chemiresistive sensing C2Sense is able to selectively target gases unable to be sensed through other methods ), iSee (next generation of humanistic artificial intelligence technology for human and robotic collaborations), Kytopen (better genetically engineer cellsby developing technology that modifies microorganisms 10,000 times faster than current state-of-the-art methods ), Suono Bio (Cambridge, MA, ultrasonic therapeutics), and Via Separations (industrial separation processes, sonme SBIR) in sectors including aerospace, advanced materials, genetic engineering, and renewable energy. .... a for-profit, public-benefit corporation and a fund that’s separate from MIT ... MIT also contributed $25 million to your first investment fund of $200 million. [Elizabeth Woyke, technologyreview.com, Sep 19, 17]
A new investment vehicle run by venture capitalist Chamath Palihapitiya raised a higher-than-expected $600 million from investors in an offering designed to help tech entrepreneurs circumvent the initial public offering process. ... known as a so-called special purpose acquisition company, or SPAC, or as a blank-check company, will seek to use its capital to make an acquisition of a private technology company. .... said they would look at technology companies valued between roughly $3 billion and $15 billion in North America and Europe. ... This year, just 17 technology companies have gone public on U.S. exchanges, raising $6.3 billion, according to Dealogic. [Maureen Farrell, Wall Street Journal, Sep 14, 17] Mostly irrelevant to SBIR companies, which except for NIH, do not have the kind of high-payoff tech that merits such investment levels.
Launch New York, Inc. (Launch NY) is a 501(c)(3) venture development organization whose mission is to identify, support and invest in high-growth, high-impact companies and catalyze the entrepreneurial culture to drive job and wealth creation in the 27 westernmost counties of Upstate New York. ... designed to provide $25,000 to $100,000 in investment capital to companies. [http://www.launchny.org/]
TechSandBox, a high-tech startup incubator located about 30 miles west of Boston, announced that it will shut down at the end of July due to “lack of sustainable funding.” The nonprofit opened in 2013 and helped start more than 50 companies, it said in a press release e-mailed to media outlets. [Jeff Engle, xconomy.com, Jul 7, 17[
Faith in borrowing for innovation. Maine voters approved a special referendum that will issue $50 million in bonds to fund investment in research, development and commercialization in the state’s seven targeted technology sectors. The Maine Technology Institute will distribute $45 million of the funds for infrastructure, equipment and technology upgrades. The remaining $5 million will be used to recapitalize the Small Enterprise Growth Fund to create jobs and economic growth by lending to or investing in qualifying small businesses. Over the last 12 years, Maine voters have approved three ballot issues to support funding for investments in research and entrepreneurs. .... Our survey work echoed what we had seen across the country: when voters were given the opportunity to vote on measures that invested in science and technology to build a new economy, they almost always voted in the affirmative. [SSTI, Jul 6, 17]
Cash for spinouts. University of Pittsburgh Chancellor Patrick Gallagher’s efforts to hotwire the region’s fledgling life sciences industry is getting a spark from a new seed capital fund targeted to helping develop new medications. The Pittsburgh Revolution Fund is soliciting $200 million, which will be made available in the form of investments in drug research teams with the idea of spinning out companies, said Bill Newlin, chairman, Newlin Investment Co., a seed-stage investment firm [Kris B. Mamula, Pittsburgh Post-Gazette, May 30, 17]
Dundee Venture Capital (Omaha, NE) raises $31M ... open to investing in technology companies with high growth potential across numerous industries, but they feel that their most successful partnerships occur when they invest in companies within the industries their partners know well. [Christine McGuigan, Silicon Prairie News, May 8, 17]
Dell Ventures, in stealth until today, has been steadily investing at a rate of about $100 million per year. The group certainly knows what the market is willing to buy. It’s seen nearly 37 percent of its 70-plus investments exit, albeit with mixed results. ... Dell’s exits alone have gone on to collectively raise $1.3 billion. The group brings the traditional benefits of a corporate venture arm to its startup portfolio — access to data, strategic sales channels and engineering and research contacts. [John Mannes, techcrunch.com, May 9, 17]
The University Early Stage Proof of Concept Fund, also known as the Advance grant program, will help move research projects and technologies developed at Michigan universities from the discovery phase to commercialization. The total amount in the new fund is $1 million, to be doled out in increments of up to $40,000 to technology transfer offices in order to advance research through market analyses, proof-of-concept validation, technical feasibility demonstrations, and developing prototypes ahead of implementation and testing. The fund also requires universities to match each grant dollar for dollar. [xconomy.com, May 8, 17]
Venture-capital firms remain flush with cash: They raised $44 billion last year, the most since the dot-com boom. But investors are staying away from scores of initially well-funded startups that once looked like relatively safe bets, forcing these companies to fight for survival as they burn through their stockpiles of cash and scramble for new money or buyers. [Eliot Brown, Wall Street Journal, Apr 23, 17]
the pace of Bay Area venture capital deals slowed during the first three months of 2017 [about $6.7 billion, closing 386 deals] , dashing entrepreneurs’ hopes that it would be easier to raise money this year. ... continues a year-long slowdown of the economic machine that powers Silicon Valley’s tech sector ... because [analysts say] investors, no longer as consumed by the fear of missing out as they were in the frenzied investment climate of 2015, are rejecting young companies with half-baked ideas and lackluster business plans. That wasn’t always the case. Between 2010 and 2015, the number of early-stage deals jumped nearly 250 percent. [Marisa Kendall, San Jose Mercury News, Apr 18, 17]
A new venture capital firm backed by a single Chinese investor is targeting early-stage drug companies with its inaugural $300 million fund. Pivotal BioVenture Partners of San Francisco, led by a Roche Venture Fund veteran, is the latest in a string of life sciences VCs pulling in big money to invest in a range of drug, device and diagnostic companies. But unlike most funds, Pivotal is taking a longer, tougher road with its plan to invest $15 million-$20 million in 15-18 companies that haven't yet demonstrated proof of concept for their dream drugs. [Ron Leuty, San Francisco Business Times, Mar 16, 17]
K2 Global is announcing a $183 million venture capital fund targeted at early stage startups with global aspirations. .... significantly larger than the $58 million the firm initially raised. With a decentralized team [with a single, Cayman headquartered fund] and no Sand Hill Road office, K2 Global aims to bring Valley hustle to international technology investing., K2 Global aims to bring Valley hustle to international technology investing. [John Mannes, techcrunch.com, Feb 23, 17]
There's a new venture fund hitting Roanoke (VA) that's aimed at supporting the startups around Blacksburg and Roanoke’s "innovation corridor." Virginia Tech and Carilion Clinic paired up to establish the $15M venture capital fund. About 60 percent of the investments will be in the life sciences industry and most of the investments will be based in Virginia. The Roanoke Times has the story. [DCInnoBeat. Feb 28, 17]
New York State Governor Andrew Cuomo is planning to use some of the cash from his recently announced $650 million biotech initiative on Manhattan’s biggest life sciences problem—lack of lab space. Cuomo will put $17 million in state funding towards a new biotech startup incubator that will be situated in the New York Genome Center in Lower Manhattan. The incubator will take up the third floor of the NYGC—about 30,000 square feet of space in the SoHo neighborhood. The incubator will be the latest outpost for “JLabs,” a network of Johnson & Johnson-owned biotech startup hatcheries in Boston, San Diego, San Francisco, Houston, and Toronto. [Ben Fidler, xconomy.com, Jan 9, 17]
UChicago announced the UChicago Startup Investment Program, a $25 million fund that will invest in early stage startups related to the University. The money will come from UChicago's endowment and be managed by the Office of Investments. The school's startup hub, the Polsky Center for Innovation and Entrepreneurship, will also play a role vetting potential investments. [Karis Hustad, Chicago Inno, Milwaukee Business Journal, Dec 5, 16]
Like many of its peers, MIT is becoming a venture capital investor, contributing $25 million to a fund that could grow to $150 million, and opening a space for startups at the edge of campus. [Benjamin Romano, xconomy.com, Oct 28, 16]
The Startup Factory (Durham, NC), which has plowed about $3.5 million into 35 startups since it was founded nearly five years ago, is no longer making new investments. .... More than half of the companies that Startup Factory invested in remain active, he said, as opposed to “zombie companies” that haven’t shut down but are among the walking dead. [David Ranii, Raleigh News & Observer, Sep 2, 16]
S3 Ventures has raised $75 million to invest in software and medical technology companies in Texas. [Austin Business Journal, Aug 23, 16]
Cambridge Innovation Capital, which commercializes technology and healthcare research from Cambridge University, has raised 75 million pounds from investors, founded in 2013 ... has already invested 33 million pounds in 13 technology and healthcare innovations, such as a company building robots to do keyhole surgery and a drug developer that targets RNA-modifying enzymes to treat cancer. [Paul Sandle, Reuters, Aug 19, 16] 1 pound = $1.32 today
The California Public Employees’ Retirement System says that venture capital was its worst-performing asset over the last five years, even as it pares back its investment in the space from 7 percent in 2012 to 5 percent now. The nation's largest pension fund, which manages about $303 billion, eventually wants its VC allocation to be only 1 percent of its total investment portfolio — and given its recent performance, it's easy to understand why, Bloomberg reports. [Riley McDermid, San Francisco Business Times, Aug 15, 16]
Veteran Bay Area investor Robert Ackerman, who has been funneling money into Silicon Valley companies for years, is trying a new way to back startups. He’s launching his own startup. A startup that breeds more startups ... The new company, dubbed DataTribe, launches this week with the goal of poaching innovative new security, data and analytics technology from the government and turning it into commercial companies. ... The government is five years ahead of the private sector in its data analysis and security capabilities, Ackerman said. [Marisa Kendall, siliconbeat.com, Jul 28, 16] It's been tried with little success with SBIR and other programs. One barrier is that government typically funds the best scientists, not the best entrepreneurs, because the government is not in the business of building businesses. SBIR rooters and their supporting politicians have been blathering about it for three decades with little to show by way of economic return. Some companies have collected more than $100M SBIR and are still making a living at it.
A foundation affiliated with Purdue University in West Lafayette, IN, is raising $10 million for a new venture fund that would help the school’s spinouts. .... earlier this year, the school committed $250 million for facilities and salaries to raise its life sciences profile [Alex Lash, xconomy.com, Jul 18, 16]
The University of Pittsburgh is slating $1 million over the next two years to fund faculty and students working to commercialize their research projects. [Susannah Snider, Pittsburgh Business Times, May 5, 16] And who will be battle-scarred veteran gatekeeper doling out the dough and advice?
Many startup founders across Asia say that venture capitalists are hitting the brakes on funding, spooked by weakness in the global economy, volatility in China’s stock market and slumping investments in Silicon Valley amid talk of a tech bubble. [Wall Street Journal, May 11]
The Badger Fund of Funds, seeded with a $25million commitment from the state, said it will launch its first venture capital fund in La Crosse. ... will focus on putting the first invested dollar into brand-new start-ups, Johnson said. It will not limit itself to any particular industry categories, he said. [Kathleen Gallagher, Milwaukee Journal Sentinel, May 5, 16] How long beyond the next election will the legislature pony up cash for investments with long payoff time? Or will it shoot for quick return from yet more apps that have no jobs benefits?
Venture-capital firms are raising money at the highest rate in more than 15 years, even as the values of some once-hot startups have begun to cool. ... U.S. venture funds have collected about $13 billion, which would be the largest total since the dot-com boom in 2000, according to preliminary data from Dow Jones VentureSource. [Rolfe Winkler, Wall Street Journal, Mar 29, 16]
The Indiana Biosciences Research Institute (IBRI) statewide public-private partnership advanced by BioCrossroads that considers itself the first industry-led collaborative life sciences research institute in the country. ... announced two new grants totaling $100 million [$80M from Eli Lilly] that would support scientific innovation addressing metabolic disease and poor nutrition. [SSTI, Mar 16, 16]
In 2014, more than 200,000 American angels invested about $24 billion in 73,000 startups, according to the Angel Capital Association (ACA). Little data, however, exists on who these investors are and how they make their decisions. ACA, Wharton Entrepreneurship and the John Huston Fund for Angel Professionalism at Rev1 Ventures are launching a nationwide survey of angel investors to learn more. [SSTI, Mar 16, 16]
Drive Capital LLC, Columbus [OH] venture capital firm that focuses on Midwestern technology startups, has raised $202 million toward a second fund that could equal its first at $250 million. [Carrie Ghose, Columbus Business First, Mar 3, 16] Their portfolio says they want quick payoff from apps they understand and know will work as advertised.
Venture capital deal terms in last year's fourth quarter signal further cooling in investors' appetite for pouring money into startups, which sparked a multi-year economic boom throughout the Bay Area. Companies raising additional rounds of capital at lower valuations, or so-called downrounds, jumped to 12 percent of the 152 Bay Area venture deals during the fourth quarter [Mark Calvey, San Francisco Business Times, Feb 22, 16]
gener8tor [Milwaukee and Madison] is seeking to invest in high-growth businesses, including software, IT, web, SaaS, e-commerce and hardware. Accepted companies receive up to $140,000 and 12 weeks of mentorship-driven programming. [website] A pile of software apps that are business risk projects with no technical risk and small economic gain. A little quick return with not much prospect for net job gains since new apps puts some existing human biz out of biz. But the politicians will trumpet the new jobs as some kind of victory. Go ahead, re-elect them to keep doing the same thing.
Ten nascent businesses applying machine learning to everything from answering medical questions to recruiting university students were tapped for Microsoft Ventures’ latest accelerator, kicking off this week in Seattle. [Benjamin Romano, xconomy.com, Feb 5, 16]
Hope rising again. The State Investment Council is considering creating a $20 million "fund of funds" to channel seed and early-stage capital to New Mexico startup companies. ... would provide capital for multiple micro funds, which would provide matching funds, the Journal reports. That could make up to $40 million available for startup companies statewide. [Mike English, Albuquerque Business First, Jan 12, 16] Legislators thirst for announcements and hope for quick return from companies not good enough to draw serious capitalists.
Central Ohio funds that invest in early-stage startups have applied for a combined $29 million from Ohio Third Frontier’s Pre-Seed loan program, which has a total of $60 million to lend. [Carrie Ghose, Columbus Business First, Dec 17] Will they invest in short term, low risk software apps, or in long term high risk huge payoff ventures? Since they are politically funded, they want quick sure return before the next election.
Michigan State U a new business accelerator. The Conquer Accelerator will offer to five startups a comprehensive, 10-week development program beginning in May. Paul Jacques, the accelerator’s director, said Conquer is open to any business—even non-tech startups—seeking to overcome obstacles to commercialization and willing to undergo an intense mentorship and customer discovery process. ... will offer each participating startup $20,000 in exchange for 5 percent equity [Sarah Schmid, Xconomy.com, Dec 11, 15]
Over the past few months, several universities have leveraged new sources of public and private funds to establish seed funds for university technology. In Philadelphia, Drexel University announced that it will establish a $10 million seed fund to make early stage investment in technologies developed by Drexel-affiliated entrepreneurs. The university will raises $5 million in funding that will be matched by Ben Franklin Technology Partners of Southeast Pennsylvania (BFP) over the next 10-years. ... The University of Virginia (UVA) will launch a new $10 million fund that will make seed investments over 10 years to help commercialize UVA technologies and opportunities. [SSTI, Dec 2] Note: the professor-based startups won't qualify for SBIR if the tenured professor is the PI.
Who's drawing the crowd? On crowdfunding platforms, where entrepreneurs are now raising billions of dollars a year, the big winners are companies making some kind of object that consumers can envision buying and using themselves. Among venture capital investments, software is reaping the lion’s share: $21.5 billion in 2014, or 42 percent of all dollars invested, compared with $6 billion for biotechnology and $2.4 billion for industrial and energy companies, according to data from an annual study by PricewaterhouseCoopers and the National Venture Capital Association. [Nanette Byrnes, technologyreview.com, Nov 23, 2015]
VC-lite. Seattle-based Lighter Capital has raised a $100 million fund to invest in growing technology startups. ... Rather than taking an equity stake when it invests in a company, it gets paid a set monthly percentage of the company’s revenue. Lighter is somewhere between a bank and a VC firm or, as Chief Executive B.J. Lackland puts it, “VC-lite.” ... also takes a different approach in selecting companies. It develops in-house software that evaluates and tracks businesses by looking at data from QuickBooks, bank accounts, LinkedIn accounts and other sources. “We can fund in a fraction of the time and effort,” .Lackland said. ... investments in 81 companies [Rachel Lerman, Seattle Times, Nov 30] If QuickBooks is a prime criterion, no investments will go to high-risk tech innovation with a big potential future.
U.S. companies are dropping [IPO]s and selling themselves at the highest rate in three years. .... All told, the dollar volume of U.S. IPOs this year has dropped 63% from the total in 2014 to $36 billion. At the same time, more than $2.3 trillion worth of merger and acquisition deals have been announced this year, a record pace that is up 46% from the total volume of 2014. [Telis Demos and Corrie Driebusch, Wall Street Journal, Nov 30]
Drexel University will raise a $10 million fund with Ben Franklin Technology Partners. Ben Franklin will match Drexel's investment dollar-for-dollar up to $5 million over the next 10 years. ... will initially focus on faculty-founded spinoff companies that have licensed technologies from the university and have already capitalized on Drexel's commercialization programs. [Dan Norton, Philadelphia Business Journal, Nov 19]
The value of technology acquisitions announced this year reached $571 billion as of [Nov 20]. That is more than double 2014’s full-year total and a 34% increase from the previous single-year high of $426 billion set in 2000, according to Dealogic. [Wall Street Journal, Nov 23]
New York state
will offer $1 million in
annual prizes for
biotechnology startups as part of a new competition.
The venture capital funding will focus on helping to commercialize research and technology coming out of universities. ... Eligible industries include pharmaceutical, medical devices, research, testing and medical labs, bio-science-related distribution and agricultural feedstock and chemicals. [Marie J. French, Albany Business Review, Nov 13, 15]
Since 2005 YCombinator [school for startups] has taken on batches of promising founders, and this month will celebrate the funding of its 1,000th startup. Though about half of its startups have failed, which is typical of early-stage investing, it has had a head-turning record of success. In addition to Airbnb, YC has had a hand in Dropbox, a cloud-storage firm, and Stripe, a payments company (see table). Eight of its firms have become what Valley folk call “unicorns”, valued at $1 billion or more. Combined, the companies it has invested in are worth around $65 billion (based on their most recent funding round), although YC’s share is only a small fraction of that total—perhaps $1 billion-$2 billion. [The Economist, Nov 7]
Uncrowded funding. Lawmakers [roughly two dozen states] have adopted rules or laws have opened up crowdfunding to small businesses, but so far crowdfunding hasn’t opened up much in return. ... In the four years since the first crowdfunding measure took effect, through the end of August, only 119 companies had filed to raise money under the state measures, according to the North American Securities Administrators Association. .... Securities regulators say many small-business owners are leery of bringing on shareholders, and investors are skeptical about buying stock in small companies with uncertain prospects. Many companies and investors remain unfamiliar with the new rules. [Ruth Simon, New York Times, Nov 11, 2015]
The new rules on crowdfunding allow anyone with a net worth less than $100,000 to invest up to $2,000 (or 5 percent of their net worth, whichever is greater) over a 12-month period. If an investor has an income and net worth greater than $100,000, they can invest up to 10 percent of their net worth. The new rules will be effective Jan. 29, 2016. [Jonathan Ortmans, Kaufman Foundation, Nov 9]
Alex Lash reported this week that the backers of LabCentral and Cambridge BioLabs, two well-known Cambridge-based biotech incubators, are on the verge of closing a $150 million fund called BioInnovation Capital. The fund is expected to invest in 15 or more biotech startups, though not just the ones that are tenants LabCentral or Cambridge BioLabs. The move is part of a broad strategy to foster biotech startups across the country [Ben Fidler, xconomy.com, Oct 23, 15]
[SEC] approved rules that pave the way for Main Street investors to take equity stakes in startup businesses raising capital via crowdfunding. ... The new rule would allow anyone to invest as much as $2,000 or 5% of their annual income or net worth, whichever is greater, in small-scale fundraising projects of as much as $1 million in any 12-month period. [Scott Martin and Yuka Hayashi, Wall Street Journal, Oct 30]
Crowdfunding underwhelming. Seattle’s startup ecosystem's biggest challenge is that there aren't enough angel investors and venture capitals to sustain the city’s fast-growing tech industry. That was what prompted the state to pass a crowdfunding law ... But startup lawyers – including the politician who sponsored the law in the first place – say the state’s crowdfunding law has been too burdensome to use so far. [Ashley Stewart, Puget Sound Business Journal, Oct 30, 15]
IPOs losing glamour. So far this year, only 14% of IPOs in the U.S. were done by tech companies, the smallest percentage since at least the mid-1990s, according to Dealogic. Many U.S. based companies that went public this year have seen their stock prices suffer, posting a median return of zero compared with their IPO price. ... The data suggest that even some of the most promising startups in Silicon Valley might be worth far less in the eyes of the rest of the investment world. The risk is that the lackluster reception for tech startups in the stock market could ricochet through companies that are still private. [Rolfe Winkler, Douglas MacMillan, Telis Demos and Monica Langley, Wall Street Journal, Oct 19, 15]
Naval Ravikant is attempting early-stage venture capital . ... [with] a website called AngelList that allows for a kind of crowdfunding of young startups. ... he has a powerful new tool at his disposal, handed to him by one of the largest private-equity firms in China: $400 million. .... the largest single pool of funds devoted to early-stage startups—ever. And it might be the largest-ever single investment by a Chinese private-equity firm in a U.S. fund. [Christopher Mims, Wall Street Journal, Oct 12, 15]
The most prominent investors in Seattle – Bezos, Madrona, Vulcan – just poured $12.5M into this new startup studio [Pioneer Square Labs] ... the $12.5 million initial funding round with 12 venture capital firms and more than 50 angel investors. ... It’s focus within tech? Software applications and services in the same category that PSL founders have built their names. [Jeanine Stewart, Puget Sound Business Journal, Oct 1, 15]
A Seattle life sciences investment and management firm just raised a huge pile of cash to fund new companies. Accelerator Corp., which also has an office in New York City, announced that it landed $11.7 million in additional investments to bring its most recent funding round, called Accelerator IV, to $62.8 million. ... In the past 10 years, Accelerator has developed 12 early-stage biotech companies in Seattle. [Annie Zak, Puget Sound Business Journal, Sep 29, 15] BUT 400 new tech companies incorporated in Seattle last year. One VC firm invested in 10 percent of them ... Seattle’s angel network is comparable to Silicon Valley’s, he said, so it’s pretty solid when it comes to seed funding. But when you get into venture capital, more than 50 percent of funding comes from outside the state. That’s because, for the most part, Seattle really only has a few major venture firms funding technology startups, Ottinger says. [Ashley Stewart, Puget Sound Business Journal, Sep 29] And what has the USG SBIR accelerator done to nurture high potnetial startups? Sorry, USG SBIR doesn't see its mission tht way, and Congress is happy just to hand out the money to begging beneficiaries.
IPO cool down. Technology companies’ share of U.S. initial public offerings has fallen to a seven-year low, boding poorly for investors who have pumped billions of dollars into startups in hopes of a big payday. ... Meanwhile, shares in many of the companies that have gone public aren’t performing well. ... There are now at least 117 private companies valued by venture firms at $1 billion or more, nearly double the number from a year ago. [Rolfe Winkler and Telis Demos, Wall Street Journal, Sep 10]
Intel Capital, the investment and M&A arm of chipmaker Intel ... has so far invested $465 million in technology companies worldwide. Fund managers think that number could rise to $600 million by year’s end. [Malia Spencer, Portland Business Journal, Sep 9, 15]
Empire State Development has created a program to encourage more venture capital investment in New York. The program, New York Ventures, will oversee the state’s innovation investment funds, which gives money to early-stage tech companies. That includes the New York State Innovation Venture Capital Fund, a $100 million multi-stage fund, and Innovate NY Fund, a $45 million seed-stage fund. The funds are meant to spark more investment in upstate [everything north of Manhattan] New York. [Chelsea Diana, Albany Business Review, Aug 3, 15]
By their bootstraps. two lifelong friends tap away at their keyboards, perfecting their eighth Internet start-up company, a hotel recommendation service called Travelmyth.com, which began in November and is already turning a profit. ... One incubator for new Greek businesses was set up by the government of the Netherlands. The Netherlands Embassy, working with local foundations and with Dutch companies like Heineken that have a substantial stake in Greece, created the incubator, known as the Orange Grove, in downtown Athens. [ANEMONA HARTOCOLLIS, New York Times, JULY 18, 2015] Start with low capital barrier stuff.
"There's too much money out there right now," he said. "I think that risk is mispriced. I think there's not a lotta fear. There's just a lotta belief and not a lotta fear. And those are, you know, worrisome times, and can be dangerous if unchecked." Despite that, [VC] Sze said he is seeing a lot of mixed signals on whether there is a tech valuation bubble. For example, he said mobile technology has fundamentally shifted risk equations, saying that "is probably only in the third inning right now still." [Cromwell Schubarth, Silicon Valley Business Journal, Jul 9] Like technology, VC is also a competitive game with an incentive to discourage competitors with scare stories.
How many angels can dance on the head of a start-up? Last year, more than 2,960 angels participated in a financing round, more than triple the 822 angels who did so in 2010, according to CB Insights, a research firm that studies venture capital. ... But while young founders are taking advantage of what probably is one of the best times to be raising venture capital, there can be serious downsides. When many angels are involved, for example, no one investor might feel compelled to help the company if it runs into trouble. Yet at the same time, having a dozen or more on-the-ground investors also can mean a dozen or more opinions about company strategy. [Mike Isaac, New York Times, Jul 11] Want to avoid giving equity and debt, get an SBIR. Just be prepped to be all alone when the contract ends.
Infonaut Holdings has opened a $2 million investment round and has begun conversations with funders in the Buffalo region. ... moved its corporate headquarters from Toronto earlier this year to take advantage of the Start-Up NY tax breaks program. ... has developed a system aimed at preventing infections in hospitals and is already working with several health-care entities in the Buffalo region, creating the expectation of a dedicated revenue stream sometime this year, said [CEO] Tom Quinn [Dan Miner, Buffalo Business First, Jun 18, 15]
Successful serial entrepreneur David Gardner has raised $10 million for a new venture capital fund Cofounders Capital, that will focus on making seed and early-stage investments in business-to-business software companies based in the Triangle. ... although the region is a hotbed for startups, venture capital funding is hard to come by. Moreover, raising the initial round of funding is regarded as being the toughest of all. [David Ranii, Raleigh News & Observer, Jun 18] Of course, money dislikes uncertainty.
Preferring maturity. Research by Mattermark, which tracks startup data, shows that between 2005 and 2014 the size of seed investments made by VCs stayed flat. The size of C, D, and E rounds, by contrast, roughly doubled. The number of small seed rounds has recently dropped, according to PitchBook, with investments below $500,000 declining 61 percent between the first quarter of 2013 and the fourth quarter of 2014. Below the VC level, angels and seed funds have proliferated as startup costs have decreased. But even angels’ interest in fledglings is down. [Leigh Buchanan. Chicage Tribune, Jun 6, 15]
A lot of a good thing. the evolving state of the venture capital market, specifically around the proliferation of “microfunds,” or funds totaling less than $50 million. There are currently more of these funds than ever before, the majority of which target companies at the seed stage and rely on backing from wealthy individuals, as opposed to institutions. By one recent count, there were 224 such funds nationally, according to pevcbanker.com, a Silicon Valley website. That proliferation is contributing to a pair of entangled national trends — a glut of seed-funded companies and a bottleneck around Series A funding (or the stage of funding directly after seed, usually between $5 million and $10 million). [Washington Business Journal, Apr 9, 15] SBIR has the same problem. If government is the sole investor in a Phase II SBIR, there is no ready source of exploitation capital ready to move the idea toward the mainstream. Yet most of the government continues to rely on its own control and assets, which are fine for plodding ordinary R&D, but not for breakthrough ideas. Only NIH seems to demand that the proposing firm have thought through and prepared for exploitation.
Get your red hot money. Investment in U.S. venture-backed companies hit $15.72 billion in the first three months of 2015. That’s up only slightly from the fourth quarter but 27% higher than in the year-earlier quarter, according to Dow Jones VentureSource .... has sent venture valuations soaring. The median pre-money valuation in the first quarter was $67.1 million, by far the highest on record, according to VentureSource. [Russ Garland, Wall Street Journal, Apr 20] Caution: that red hot money needs a compelling story of eventual large profit. Only the government will fund sweet technology just becasue it's sweet and in the hands of a favored political class.
New Enterprise Associates, the giant investment firm based in Chevy Chase [DC & MD]and Menlo Park, Calif., sent shock and awe through the venture capital world last week with news that it had raised a record $2.8 billion from investors — a sign that the business of funding start-ups is hitting its stride again after years of uncertainty. ... For every 10 or so investments, a bunch that fail and a few are mediocre. Then there is the occasional home run, such as Groupon, which earned NEA 100 times its investment. [Thomas Heath, Washington Post, Apr 19] For those who pretend that SBIR serves the same function for government, the reality is that most SBIR goes for safe projects that have a high probability of "success," not a sky-high ROI for just a few. Agencies care only in their success for the budget wars, not of the business's market or financial success.
The Eastern New York Angels are raising funds in a region [early-stage technology companies within 75 miles of the Albany area] where other firms have failed. The member-managed fund raised $1.4 million for its first round and invested in seven startups. Now the angel network is closing its second fund of almost $2.5 million with new startup investments on the way. [Chelsea Diana, Albany Business Review, Apr 10, 15]
An unusual public-private venture capital fund targeting the biosciences is launching in New York with $150 million to deploy, three times the original goal. The Early-Stage Life Sciences Funding Initiative combines $10 million of New York City money with $140 million from the Celgene, GE Ventures, and Eli Lilly. The cash will be available for "the most promising research generated by the city's academic medical institutions and leading entrepreneurs [Ben Fischer, New York Business Journal, Apr 1, 15]
Florida Angel Nexus is planning a new investment fund for local tech startups with an initial closing round of $5 million by the end of summer and an ultimate goal of raising $20 million. [Matthew Richardson, Orlando Business Journal, Feb 23, 15]
Apples and lemons. The most controversial aspect of the [crowdfunding] rules is tied to who may invest in such offerings. Typically access to anything out of the ordinary requires an investor to be “qualified”, meaning those with a net worth of $1m or an annual income in excess of $200,000. Now anyone will be able to invest up to 10% of their income in early-stage ventures, a type of investment that makes stockmarket gyrations look dull. The new rules will galvanise crowdfunding. ... . In Britain, where equity crowdfunding is already thriving, regulators have warned investors it is “very likely” they will get wiped out. For every Apple, in other words, there will be many, many more lemons. [The Economist, Apr 11]
Venture capitalists are funding an increasing number of Israel-based startups, attracted to the abundant supply of technological innovations that are coming out of Israeli companies. .... said David Goodtree, a global venture partner with OurCrowd, an Israel-based crowdfunding VC firm [said] about 700 Israeli startups received $3.4 billion in VC backing last year, up 46 percent from 2013 [Jeff Berman, New York Business Jounral, Mar 25, 15] Capital flows to opportunity.
A new [Austin TX] seed-stage VC firm reports plans to raise a $20 million fund. StartupRunner Capital Venture Fund I LLC disclosed the details in [SEC] filing [Christopher Calnan, Austin Business Journal, Mar 24] No sign of high tech risk investment.
The Arrowhead Center, New Mexico State University's business accelerator, is launching a fund to help inventors get their projects off the ground. The NMSU Foundation has pledged up to $500,000 in matching contributions to the fund to help it get off the ground. [Andy Beale, Albuquerque Business First, Mar 10, 15]
Austin Ventures LP, the region's most popular and powerful backer of local technology startups, has officially decided to dramatically reduce its activity in early-stage investments. ... bills itself as a growth equity and VC firm, has been a major source of capital for dozens of local technology companies since 1979. It has also served as a pipeline for proven executives seeking their next companies. [Christopher Calnan, Austin Business Journal, Feb 19, 15]
The University of Pittsburgh is preparing to launch a $1 million fund to support very early stage product commercialization. The fund will make awards up to $50,000 to support product commercialization and prototyping projects across the university. [Kris B. Mamula, Pittsburgh Business Times, Feb 18] Not enough money for serious innovation and no source of follow-on capital.
VCs bemoan angels. One of the biggest obstacles to growing start-ups in Wisconsin lies with some of the financiers who provide the money, a Milwaukee VC said. Some angel groups, whose members invest in young, high-potential companies, have been offering terms to start-ups that "de-risk" the deals for themselves but hurt the companies' longer-term prospects, said Brian Taffora, managing director at CSA Partners LLC, a venture capital fund backed by Milwaukee County Executive Chris Abele. .... Start-ups can evaluate the terms they're being offered by comparing them with the National Venture Capital Association term sheet template and similar documents, said Laura King, founder and chief executive officer of Elucent Medical LLC, a Brookfield company that is developing a detection system to aid in breast cancer treatment. [Kathleen Gallagher, Milwaukee Journal Sentinel, Feb 26, 15] Imagine that: investors protect themselves in a world fraught with uncertainty.
Venture-capital firms also have more money to play with these days. U.S. venture firms raised $33 billion in capital last year from pension funds, university endowments and other sources, up 62% from a year earlier. But, With more money at their disposal, venture firms are having to invest great sums per deal. [Scott Austin, Wall Street Journal, Feb 18]
Real seed investment. On average, every dollar N.C. Biotech loans to young life science companies is met with $118 in additional funding to those firms from disease philanthropy and government grants, angel and venture investment and other financial support, according to the center. Every grant dollar is met with an average $28 in additional funding. ... loans and grant made by the Biotech Center in the second fiscal quarter: $50,000 in a Company Inception Loan to Spyrix (Chapel Hill, NC; no SBIR), UNC-Chapel Hill spinout, developing a treatment for cystic fibrosis. The loan is intended to help position the company for outside investor and foundation funding and to help with preclinical development of its product. $75,000 to Eppin Pharma (Chapel Hill, NC; no SBIR), UNC-Chapel Hill spinout, to help in its development of a reversible, oral, non-hormonal male contraceptive pill. This money will help support toxicology and other testing of the company's lead drug candidate and help position Eppin to seek additional funding from investors, federal grants and foundations. $250,000 to Dignify Therapeutics (Research Triangle Park, NC; one SBIR, eight employees), developing a novel drug to help people with spinal injuries clear their bladders and bowels when they choose to do so. The loan will support studies of the drug's safety and help Dignify develop a final formulation of the remedy, for use in clinical trials. $458,000 to Bioptigen (Morrisville, NC; $2.9M SBIR), to support late-stage development and clinical testing needed for FDA approval of its intrasurgical optical coherence tomography device for real-time guidance of ophthalmic surgery. $500,000 to Baebies (Durham, NC; no SBIR), to help it develop its products to diagnose health risks in infants from a single dried blood spot, using a technology called digital microfluidics. This loan supports the company's newborn screening tests for three devastating disorders (Pompe, biotinidase deficiency and galactosemia). [Jason deBruyn,Triangle Business Journal, Feb 4, 15] SBIR has no chance of such rewarding results because about three-fourths of the money is spent by agencies that just want what they can use for their own purposes with no regard for whether there is any widespread economic payoff, nor any payoff to society. SBIR can hide these facts behind privacy of private business whihc is OK with Congress as long as the small biz get the prescribed handouts.
Airbnb, based in San Francisco, had early and ample access to venture capitalists in nearby Silicon Valley, including Sequoia Capital. Jeff Bezos, the billionaire founder of Amazon, also bought in. So far, Airbnb has raised almost $800 million in funding, giving the company a valuation of about $13 billion. .... It is that kind of money that enables American start-ups to almost immediately pursue global ambitions, taking on and often besting European and other international competitors. European start-ups raised about $7.6 billion last year, a 41 percent leap over 2013, according to the data provider Dow Jones VentureSource. But that was only about one-fifth the amount raised by American technology companies, which secured a combined $37.9 billion in 2014, up more than 30 percent from the previous year. And this year is off to such a roaring start for American tech financing that some experts are warning of a potential bubble. [Mark Scott, New York Times, Feb 16]
MassChallenge (Boston, MA), the startup accelerator program that gives entrepreneurs a head-start without taking a piece of their company, is is now accepting applications for new classes at three locations with the official addition of a U.K. branch in London. ... offers office space, mentorship, and prizes backed by public and private money .... Since it began in 2010, MassChallenge says it has graduated more than 600 companies that have gone on to raise about $706 million in additional funding and generated more than $404 million in revenues. [Curt Woodward, xconomy.com, Feb 11, 15] Inquiring minds should ask wny thirty years of SBIR cannot make similar claims.
Satellite Internet provider ViaSat has joined Qualcomm and Cisco as a potential investor/mentor in startups in the no-strings-attached EvoNexus incubator program. The company will examine companies admitted to EvoNexus for young firms that fit ViaSat’s interest — connected services, telecommunications technology and cyber security. It then could invest up to $250,000 in selected EvoNexus startup [Mike Freeman, utsandiego.com, Feb 12, 15]
The people want another start-tup casino. an emerging group of investors who negotiate with upstart companies to buy equity stakes that are sold through so-called crowdfunding on websites such as AngelList. ... a sign of the intense desire among small investors to try to cash in on the technology industry’s gold rush. Rather than wait for up-and-coming firms to go public, these investors are pouring money in much earlier, hoping for supersize returns if a company becomes a hit. .... When Gil Penchina decided to invest $25,000 in Beepi Inc., a two-year-old online buyer and seller of used cars, he fired off an email asking other people if they wanted to get in on the deal. Within a day, he rounded up a total of $2.8 million from nearly 100 investors—and rejected 300 more. ... Mr. Penchina hopes to add 25 to 50 new syndicates this year to the dozen already running. [Evelyn M. Rusli, Wall Stret Journal, Feb 8]
TarHeel Blue Green. UNC-Chapel Hill has created a $5 million fund to help startups commercialize technology developed at the university.... comes from earnings derived from “non-state monies.” ... will invest anywhere from $100,000 to $500,000 in startups ... Trustee Chairman Lowry Caudill said that the university does almost $1 billion in research annually. [David Ranii and Jane Stancill, Raleigh News & Observer, Jan 22]
Everywhere needs one. The Sacramento Regional Technology Alliance has a new idea for supporting local tech firms: launching its own venture capital fund to directly invest in them. ... [SARTA CEO Kirk] Uhler said he anticipates a fund of between $5 million and $7 million. .... would be a for-profit entity owned by SARTA [Mark Anderson, Sacramento Business Journal, Jan 16]
A new [crowdfunding] rule allowing Oregon businesses to raise funds from state residents took effect Jan 15. ... joins about two dozen states that now allow a form of crowdfunding called community public offerings, authorized by Congress in the 2012 Jumpstart Our Business Startups (JOBS) Act. ... allows individuals to invest up to $2,500 in Oregon businesses, which would be allowed to raise up to $250,000 ... a launch party slated for 7 to 10 p.m. Jan. 22 at Hatch, 2420 N.E. Sandy Blvd. [Wendy Culverwell, Portland Business Journal, Jan 15, 15]
Temple Ventures — Powered by Ben Franklin, is described as a $1 million accelerator designed to give a boost to startup companies advancing Temple [University)-created technologies. ... will provide startup funding, and new business launch support. It will also offer incubation services, like workspace at Ben Franklin's Navy Yard headquarters ... Temple and Ben Franklin each invested $500,000 [Lauren Hertzler, Philadelphia Business Journal, Jan 13, 15]
The California Institute for Regenerative Medicine said it is now accepting grant applications for funding under its overhauled system. CIRM 2.0, as it's called, is designed to sharpen the focus on quickly translating research to therapies. More information at the agency's website http://www.cirm.ca.gov/cirm2awards. [Bradley Fikes, utsandiego.com, Jan 9]
Venture capitalists poured a whopping $48.3 billion into U.S. startup companies last year, investing at levels that haven't been seen since the heady days before the dot-com bubble burst in 2001. Software and biotechnology companies were the leading recipients of venture funding in 2014, which rose more than 60 percent from the previous year, according to a new report. [Brandon Bailey, AP, Jan 16, 15]
The Innovate NY Fund totals $45 million — $35 million from the state and $10 million from Goldman Sachs — and is a fund-of-funds model, where smaller portions are administered by individual incubators around the state. ... So anticipation has been high on the structure of the state's new $50 million venture capital fund, which in some ways is a successor to Innovate NY. .... The new fund will also have a much broader focus than Innovate NY, which focused solely on seed stage investments. The new fund will run from pre-seed to venture-stage business attraction. A $15 million chunk of the new fund will focus on seed stage equity deals in underserved industries [smell the politics?] , with a co-investment expectation of roughly 2-to-1 from the private sector. [Dan Miner, Buffalo Business First, Jan 5, 15]
The California Institute for Regenerative Medicine said it is now accepting grant applications for funding under its overhauled system. CIRM 2.0, as it's called, is designed to sharpen the focus on quickly translating research to therapies. [Bradley Fikes, utsandiego.com, Jan 9, 15]
The money raised by venture-capital firms hit $32.97 billion in 2014, a 62% increase over 2013 and the highest total since 2007, as investors seek to take advantage of a hot market for startup funding and initial public offerings. ... early-stage investing showing an increase of 33.1% [Russ Garland, Wall Street Journal, Jan 12, 15]
the New York State Innovation Venture Capital Fund [$50 million] is expected to leverage at least $100 million in private capital to support early stage companies in high growth areas such as advanced materials, clean technology, life sciences/biotechnology, and information technology. ... All investments require at least a 1:1 match from private sources. ... http://esd.ny.gov/BusinessPrograms/NYSInnovationVentureCapitalFund.html. [SSTI, Dec 17]
A new St. Louis business incubator focused on the biotech industry is looking to take ideas at their earliest stage, turn them into companies and fund them until they're ready to sell off. T... called Common Place Holdings, led by Managing Director Harlee Sorkin and Director Paul Olivo, and is backed by $2 million from Arsenal Capital Management ... "The objective of the fund is to identify, nurture and grow ideas into companies that can then raise Series A capital as an independent entity," Reinecke said. [Brian Feldt, St. Louis Business Journal, Dec 4, 14]
gener8tor is pleased to announce the close of “gener8tor Fund II,” with over $2.1 million raised to fund the continued operation and investments. ... To date, gener8tor’s 28 portfolio companies have raised nearly $30 million ... Milwaukee 2014, had over 450 applications for five slots. gener8tor plans to invest in five companies for the Madison 2015 program ... Companies interested in applying can apply online at http://www.gener8tor.com/apply/. [fund press release, Nov 26,14]
Disruptive innovation has become the single biggest worry for many firms. Setting up VC arms is a way to identify life-threatening changes to their business early, so that they can adapt or, better yet, get in on the act, says Ben Veghte of America’s National Venture Capital Association, whose membership has mushroomed in recent years. ... Intel Capital, the venture-capital VC unit of the American technology giant, is not quite sure yet but it wants to find out. It recently announced it was taking stakes in 16 startups, including the firms making these products. Intel has been in the venture-capital business for over 20 years, and has invested in more than 1,300 companies in 56 countries. Over that time corporate enthusiasm for venture capital has waxed and waned—but has seldom been greater than it is now. [The Economist, Nov 12, 14] Included in Intel's investment are: Netspeed Systems (Mountain View, CA; no SBIR) has developed a system-on-chip design platform and advanced on-chip network solutions. It says this lets system-on-chip designers create smaller and more power-efficient chips more quickly than usual; AnDAPT (Santa Clara,CA; no SBIR) stealth-mode company working on hardware for multifunction sensor integration and integrated system power management. The aim is to lower power consumption and cost while providing high reliability. [Intel said] we expect to invest a total of $355 million this year. [Cromwell Schubarth, Silicon Valley Business Journal, Nov 4, 14]
Bayer HealthCare will invest $25 million in a new Versant Ventures fund for biotech and medical device companies. ... Bayer in November invested in Versant's Inception Sciences incubator in San Diego, where Versant spun out a company to conduct early research in retinal eye diseases. Bayer has an exclusive option to buy that company. [Ron Leuty, San Francisco Business Times, Nov 3, 14]
Gener8tor, which runs a start-up training program that operates in Milwaukee and Madison, has raised a $2.2 million fund ... Since forming in 2012, gener8tor has invested in 28 companies, which have raised nearly $30 million from gener8tor's organizers and outside investors. [Kathleen Gallagher, Milwaukee Journal Sentinel, Nov 18] The list of start-ups helped is mostly made of small-ball ideas with low capital needs and little technical uncertainty. Only a business question of: It can be done, but will anyone buy it?
Angel investors look to fund veteran-led startups ... A group of ten veteran-led startups will pitch their ideas to The Angel Capital Association [Janelle Nanos, BetaBoston, Nov 11]
Bayer HealthCare will invest $25 million in a new Versant Ventures fund for biotech and medical device companies. [Ron Leuty, San Francisco Business Times, Nov 3]
Jeff Stewart, an entrepreneur who has founded several technology companies, is starting a fund to grow early-stage businesses developed by faculty, alumni and students at Rensselaer Polytechnic Institute in Troy, New York. .... currently CEO and co-founder of [tech company] Lenddo(New York City; no SBIR) ... also co-founded Mimeo.com, a digital content distribution service ... Stewart anticipates investments in startups will range anywhere between $250,000 and $2.5 million. [Megan Rogers, Albany Business Review, Oct 21, 14]
BioHealth Innovation Inc. is launching a new $50 million fund to support early-stage medical and health IT companies in central Maryland. ... will focus on seed and early-stage equity investments in therapeutics, medical devices, diagnostics and health IT companies. [Sarah Gantz, Baltimore Business Journal, Sep 30]
Bryan Johnson has committed $100 million—a substantial portion of his personal fortune—to a new venture-capital fund aimed at what Mr. Johnson himself calls “crazy” projects. .... The goals of the startups Mr. Johnson is backing are varied. They include an effort to capture an asteroid and mine it, a company that wants to meaningfully increase both the length and quality of human life, and a firm that wants to blacken the skies of our cities with swarms of self-flying autonomous drones. ... The U.S. government, which is overwhelmingly responsible for the sort of basic research that has given us things like the Internet, is currently funding only about a third of R&D in the U.S., while the rest is paid for by the private sector. In the 1960s, that proportion was reversed, notes economist Timothy Taylor, editor of the Journal of Economic Perspectives. The problem this presents for disruptive innovation is that businesses typically emphasize development, as opposed to research, which means commercializing existing technologies. [Christopher Mims, Wall Street Journal, Oct 21] As someone who judged 11,000 SBIR proposals in ten years, we have no shortage of "crazy" ideas, nor do we suffer from a shortage of money for ideas with realistic prospects of big advances and ROI.
BioAccel has created a $2 million venture fund to support its portfolio companies that merit additional investment. ... an opportunity for Arizona angel investments [in] Arizona bioscience firms [Hayley Ringle, Phoenix Business Journal, Oct 14, 14]
The biggest secret in venture capital is that the best investment in a successful fund equals or outperforms the entire rest of the fund combined. This implies two very strange rules for VCs. First, only invest in companies that have the potential to return the value of the entire fund. This is a scary rule, because it eliminates the vast majority of possible investments. (Even quite successful companies usually succeed on a more humble scale.) This leads to rule number two: because rule number one is so restrictive, there can’t be any other rules. [Ralph Benko quoting Peter Thiel, Forbes, Oct 13, 14] Note that government subsidy programs don't work that way; they want high percentage with some success (and money flowing to their constituents). So, SBIR seeks the highest chance of some success in each project, a formula for failure as an investor and creator of new worlds.
[IPO] queue looks like it’s about to move fast again. West Coast biotechs made progress toward an IPO in recent days. Atara Biotherapeutics (no SBIR) re-filed its paperwork after pulling back in July. Virobay (Menlo Park, CA; no SBIR) said it would aim to sell 3.8 million shares between $12 and $14 a share in its upcoming offer. diagnostics firm AutoGenomics (Vista, CA; no SBIR) hopes the third time’s a charm, filing for a $60 million IPO after two previous attempts fizzled. [Alex Lash, xconomy.com, Oct 9, 14]
VentureOhio found that $523 million is required by the end of 2015 to fund 176 companies, and only about $260 million is available, some of which will be deployed outside the state by venture capital firms with broader focuses. [Columbus Business First]
“A four-person startup
will tell me, ‘We
need a 10,000-square-foot office for future growth,’” he explains.
“I’ll say, ‘No, you need 1,000 square feet.’” .... The trend
especially pronounced in San Francisco, where venture capital is
pouring in, competition among startups is fierce and rents are rising
to dot-com-boom levels. .... This year 84 U.S. venture-backed
technology companies have raised at least $50 million in individual
rounds of financing, a figure that was inconceivable a few years ago,
according to Dow Jones VentureSource.
Rusli , Wall Street Journal, Oct 5] As the stream of financing stories
flows in this journal, the recipients are almost all in medicine and
almost nothing in the standard stuff the federal mission agencies fund
with SBIR. VC is not in short supply worldwide, but VC won't
touch things that merely make the government smarter. No matter, the
politicians have to be seen kissing small biz, and SBIR fits the bill
of no appropriation fights and no tax demands on the economy and no
obvious damage to the federal mission.
Accelerant, an initiative of the Dayton Development Coalition, has announced the two companies will be the first beneficiaries of its $9.5 million seed-stage venture fund ... one will be $500K to to clinical diagnostic laboratory Ischemia Care (no SBIR) which will move to Dayton from suburban Cincinnati. [Tristan Navera, Dayton Business Journal, Sep 4, 14]
Early-stage startup investor CincyTech has won a national award for increasing access to capital for entrepreneurs in the Greater Cincinnati area, the firm announced. CincyTech won a State Science and Technology Institute 2014 Excellence Award for Technology Based Economic Development. CincyTech was one of five companies nationwide to receive an award and won in the Increasing Access to Capital category. [Andy Brownfield, Cincinnati Business Courier, Sep 15]
A Reuters analysis of the previous 15 largest IPOs of all time shows that beyond a first-day pop, the first year's performance for most of these mega deals was a major flop. [Dan Burns and Akane Otani, Reuters, Sep 18]
Seattle Angel, which over the last three years has focused on introducing more qualified people to angel investing, plans a Northwest-focused investment fund set to begin early next year. ... Seattle Angel estimates that less than 500 people invest in local startup companies, despite some 60,000 people in the Seattle area who are qualified to do so. [Benjamin Romano, xconomy.com, Sep 16]
The University of California is planning a $250 million venture-capital fund to finance startup companies stemming from research conducted by its faculty and students. ... seeded with money from the UC endowment, would be one of the largest of its kind, targeting work done at the university's 10 campuses, five medical centers and three national laboratories. .... During the past 30 years, the University of California has invested $2 billion in venture-capital funds, some of which have put money into its own startups. ... To date, more than 700 startups have formed to commercialize the school's research. Since 2005, such startups have generated $5 billion in venture capital, according to the university. [Erica Phillips, Wall Street Journal, Sep 16] The story says almost nothing about the ROI from the $2B.
Silicon risk valley. I guarantee you two things: One, the average burn rate at the average venture-backed company in Silicon Valley is at an all-time high since '99 and maybe in many industries higher than in '99. And two, more humans in Silicon Valley are working for money-losing companies than have been in 15 years, and that's a form of discounted risk. [Bill Gurley interview with Yoree Koh and Rolfe Winkler, Wall Street Journal, Sep 15]
Two powerhouses for biotech startups — StartX and QB3 — are joining forces to open lab space in Palo Alto for as many as 20 life sciences companies. .... beyond space, what those companies receive for that money is tough for early-stage biotech companies to find: a startup ecosystem three blocks away from Stanford University, access to vital core lab facilities and two organizations with big-name connections and enviable track records for translating fresh ideas into standalone companies. ... More than 160 companies, most of them created by Stanford faculty, alumni or students, have come through StartX since Cameron Teitelman launched the accelerator in summer 2009. [Ron Leuty, San Francisco Business Times, Aug 27, 14]
Cincinnati’s biggest angel capital group, Queen City Angels, is the second-best group of private seed-stage venture capital investors [of 370 angel capital groups from across the country], according to a new ranking. .... a 14-year-old group of about 50 wealthy individual investors, shot up the list because of its high percentage of successful investments and its high number of exits, according to New York-based venture capital analysis firm CB Insights. Who else scored high? Life Science Angels ranked first in CB Insights’ study. That makes sense: it’s based in Silicon Valley. Venture capital hotbeds Boston, Atlanta, Los Angeles and the Research Triangle area of North Carolina are all represented in the top 10. [Steve Watkins, Cincinnati Business Courier, Aug 19] Got a new idea that needs private capital? Set up shop where the money lives. Otherwise seek a government handout, like SBIR. That money's free, but you're up against companies that specialize in handout work and handout managers who don't care about your company.
Next Silicon Valley VC wave. for the first time in its nine-year history, the Y Combinator accelerator program is actively recruiting health-technology startups. ... Similarly to these [Google, Apple and Samsung] firms, Y Combinator is hoping to corner a sliver of the American healthcare market, which accounts for an estimated 20 percent of U.S. gross domestic product. ... Y Combinator offers funding and advice, in exchange for about 6 percent of each startup's equity. [Christina Farr, Reuters, Aug 20]
Ben Franklin Technology Partners of Southeastern Pennsylvania has recently approved $1.9 million in early-stage funding for 11 regional startups. ... Almost half of the companies involved in the most recent $1.9 million round have received Ben Franklin cash before. [Lauren Hertzler, Philadelphia Business Journal, Aug 7, 14] Unfortunately for SE Penn, the winners are small ball technology with quite limited scope for creating new permanent industries.
The University of Minnesota said that it’s scrapping plans for two venture capital funds worth $70 million and instead adopting a smaller program aimed at providing seed financing to start-up technology companies born on the university campus. The U’s new Discovery Capital Investment Program will provide early-stage funding to help transfer university-created technologies to the commercial market. Under the new plan, the school will invest up to $350,000 in equity financing in new technology companies working on a promising product or service. [DEE DEPASS, Minneapolis Star Tribune, Aug 19]
A bit more than halfway into 2014, we’ve seen a string of crowdfunding success stories emerge from Boston’s tech sector. The region that previously launched the Form 1 3D printer and the 3Doodler to the world via crowdfunding has so far this year given us Jibo the social robot, surveillance-proof email, an inexpensive next-generation security system, and plenty more through Kickstarter and Indiegogo. The "winners": ProtonMail — ultra-encrypted email service, Blink — HD video monitoring and motion detector system, TinyTesla — singing tesla coil, DIY assembly, KOR-FX Gaming Vest, The Q — connected home audio and lighting system, KIBO — kit that teaches youngsters the basics of programming robots, Bringrr - better tracking of important items, LuMini — color-changing mood lightbulb controlled over Bluetooth. [Kyle Alspach, betaBoston, Aug 12] All convenient consumer items with no potential to create new markets, but needing only a little capital.
U.S. venture firms raised $7.4 billion in new commitments for 78 funds during the second quarter of 2014, which was the strongest quarter in terms of the number of funds since 2007. [Cromwell Schubarth, Silicon Valley Business Journal, Jul 9, 14] All the weeping by small high tech companies begging government money is pure politics by uncompetitive companies wanting an edge for government contracts despite no clear evidence that they are any better at government work than open competition. But without annual appropriation competition, such programs as SBIR live on as at least doing no harm.
American life sciences companies raised $3.9 billion in 55 initial public offerings during the first half of 2014, accounting for more than 81 percent of the $4.7 billion raised globally in 68 IPOs, according to a tally from Burrill Media. In a statement, CEO G. Steven Burrill said, “The first half of 2014 saw the most life sciences offerings completed in any six month period ever.” [Bruce Bigelow, xconomy.com, Jul 25]
Business software giant Citrix Systems is teaming up with local business accelerator HQ Raleigh to help local entrepreneurs develop breakthrough technology products. ... the entrepreneurs will work alongside “intrapreneurs” — that is, new product teams from within Citrix or its corporate partners .... will receive $25,000 in seed funding, plus mentoring from business executives, venture capitalists and others. A total of 10 teams, both entrepreneurial and intrapreneurial, will be accepted into the three-month session in Raleigh. [Raleigh News & Observer, Jul 25]
A new Delaware-based venture fund dubbed Leading Edge Ventures will cater to early-stage companies in the state and region. .... will focus on startups that benefit businesses and consumers in the areas of information technology, healthcare and other high-growth markets. Initial investments will range from $50,000 to $250,000 per company, with the potential to invest up to $750,000 per company, a press release said. [Lauren Hertzler, Philadelphia Business Journal, Jul 24]
Riding high on big paydays from companies such as Braintree, Groupon and GrubHub, Chicago investors are looking outside the Midwest's biggest city for some of their next investments. One increasingly popular option: Madison's digital start-ups. [Kathleen Gallagher, Milwaukee Journal Sentinel, Jul 16] Of course, the investors are looking for the biggest payoff in the shortest time, which puts real technology innovation at a competitive investment disadvantage. Real tech is hard; better coupon management and online food-ordering are easy.
the New Ventures Facility, a startup incubator space within the [University of Washington] Center for Commercialization, was recognized as the most promising university business incubator by the University Business Incubators Global Index. The incubator space in Fluke Hall opened two and a half years ago, has hosted 18 startup companies, including 14 there now, and is expanding to make room for more. .... The top incubator was the Rice Alliance for Technology and Entrepreneurship at Rice University in Houston, TX, followed by SETsquared at University of Bath in the U.K., and SCUT National University Science Park at South China University of Technology. [Benjamin Romano, xconomy.com, Jul 11]
The Eastern New
York Angels will
more companies, this time focusing on later stage companies instead of
The goal is to raise $2.5 million by the end of the year. ... recently has invested $1.5 million into six early-stage companies with a seventh pending .... Companies funded in the first round include Paper Battery (Troy, NY; no SBIR), Ener-G-Rotors (Troy, NY; no SBIR), Vital Vio (Troy, NY; no SBIR),ThermoAura (Troy, NY; no SBIR) (a manufacturer of high performing thermo-electric material, will open a new production plant in suburban Albany this summer as it moves into commercialization), and Free Form Fibers (Saratoga Springs, NY; one SBIR). [Keshia Clukey, Albany Business Review, Jun 30, 14]
Cincinnati Children’s Hospital Medical Center announced today that it will invest $6 million to create startup companies based on technology developed by its researchers. .... the hospital expects to focus on new methods of addressing unmet medical needs – especially those involving rare pediatric conditions. .... the third round of funding that Cincinnati Children’s has received from Third Frontier since 2005 [Barrett J. Brunsman, Cincinnati Business Courier, Jun 18, 14]
42 percent of (Minnesota) tech companies raising capital during the second half of 2013 were pre-revenue. ... About 60 percent of health care and device companies didn’t have revenue ... the first Seed Capital Review report from Gray Plant Mooty [Katharine Grayson, Minneapolis / St. Paul Business Journal, Jun 26, 14] Before revenue, the angel's money goes further in equity. After profit prospects improve, equity gets a lot dearer.
Indiana Secretary of State has announced rules for crowdfunding in Indiana. Lawson says the rules announced Tuesday will allow Indiana entrepreneurs to raise up to $2 million through crowdfunding and Indiana investors to invest up to $5,000 per opportunity. [AP, Jul 2]
Wealthy investor Peter Thiel put money into three biotech startups through his Breakout Labs, a nonprofit fund aimed at scientific innovation. Breakout Labs, led by Executive Director Lindy Fishburne, has now invested in 19 companies. The three most recent investments are: Cortexyme (San Francisco, CA; no SBIR) seeking treatments for Alzheimer's and other aging disorders; G-Tech Medical (Palo Alto, CA; no SBIR) working on a wireless, wearable sensor that will track muscle activity in a person's gastrointestinal system; EpiBone (New York, NY; no SBIR) engineers a patient's own living bone to fit where there's a defect. Breakout Labs gives up to $350,000 to the startups it supports. [Silicon Valley Business Journal, Jun 11, 14]
Genentech’s top dealmaker Jim Sabry, whose focus is almost exclusively on early-stage programs and products—“90 percent of our deals are for things that haven’t seen man yet.” In other words, they haven’t reached clinical trials. ... Often the VCs are eager to grant buyers early options to acquire—a practice that was anathema to VCs a decade ago. [Alex Lash, xconomy.com, Jun 27]
A trio of Bay Area life sciences companies — Tobira Therapeutics (South San Francisco, CA; no SBIR, founded 2006, backed by Danish drug developer Novo A/S ), Zosano Pharma (formerly Macroflux, Fremont, CA; no SBIR, founded 2006) and IntersectENT (Menlo Park, CA; no SBIR) — will seek more than $200 million in upcoming IPOs. [Ron Leuty, San Francisco Business Times, Jun 24, 14]
500 Startups, the $100 million Silicon Valley venture fund perhaps best known for its incubator program for young companies, said it would tap a new source of cash for its latest fund: the public. .... all investors will still have to be accredited ... McClure's fund, which will target investors who can commit $1 million to $5 million each, is 500 Startups' third fund. It raised a $29 million fund in 2010 and a $44 million fund in 2012. [Sarah McBride, Reuters, Jun 25]
After a few years fine-tuning its investment strategy, Accelerate Long Island has seeded its first group of startups. The nonprofit organization and the Long Island Emerging Technologies Fund announced plans to put $500,000 into five Long Island, NY-based biotech and cleantech startups: Goddard Labs, Green Sulfcrete, PolyNova, SynchroPET, and Traverse Biosciences. [Ben Fidler, xconomy.com, Jun 9, 14] None had SBIR.
Investors say they get about a 30 percent discount when they invest in Seattle-area companies compared to similar companies in Silicon Valley [Emily Parkhurst, Puget Sound Business Journal, Jun 17]
Ohio entrepreneurs need at least $523 million of angel- and early-stage investment over the next 18 months to fund growth, according to a survey from trade group VentureOhio. .... $85 million is needed in the angel stage and another $438 million is needed in early-stage funding, which is a crucial point for growth and job creation, the group said. [Evan Weese, Columbus Business First, May 28] But what will these needy return to investors? And if that return is great, why do you suppose the "need" still exists? Sounds like the prelude to a plea for government spending? If so, the Republicans in political control in Ohio will be hard to convince.
The Triangle’s newest venture capital fund, Bull City Venture Partners, plans to announce that it has raised nearly $26 million from investors that it will plow into the next generation of technology startups. [David Ranii, Raleigh News & Observer, Jun 16]
The national trend toward fewer business start-ups is particularly disconcerting for Wisconsin, which trails neighboring states in venture capital by a large margin. [Milwaukee Journal Sentinel, Jun 3, 14]
[director Rik Vandevenne] River Cities Capital Funds announced a $200 million fundraise, .... Typically, River Cities pours between $5 million and $12 million into startups, with the focus being on companies in the information technology and health care spaces. He’s not interested in companies that just require a couple hundred thousand dollars – because they’re not thinking big enough. ... of the 1,100 pitches his company saw last year, it only made four investments. [Lauren K. Ohnesorge, Triangle Business Journal, May 21]
River Cities Capital Funds is already hard at work trying to invest money from its newly raised $200 million fund. .... looking to invest in health care and tech companies, just as it has in its recent funds. It will invest less than $10 million in each company. [Steve Watkins, Cincinnati Business Courier, May 21, 14]
Government VC, an oxymoron. Venture capital in Europe has delivered returns of just 2.1% a year since 1990, according to Thomson Reuters, making it perhaps the worst investment class outside Japan (American VC managed around 13%). ..... Several studies of public VC schemes have found that for every dollar the public sector puts in, the private sector pulls one out. .... The EIF alone has sunk more than €3.8 billion into 260 venture funds, but provides no data on how its investments have fared. Ho-hum entrepreneurs whose firms only launch because of government backing (and dud firms that would have folded long ago without it) drive down average returns ..... Josh Lerner of Harvard Business School compares doling out public-sector cash, EIF-style, to serving a main dish before the table is set. [The Economist, May 17] If economic return is the objective, government does not have the tools and attitudes.
A $50 million venture capital fund is being organized in Davis (CA) to invest in early-stage agriculture and life science technology companies. The AgTech Innovation Fund, structured as a limited partnership, likely would invest $250,000 to $500,000 in initial seed rounds of funding into promising companies ..... AgraQuest (Davis, CA; $1M SBIR) was a biotechnology company founded by Pam Marrone. It was bought by Bayer CropScience for $425 million in 2012. Marrone’s next company, Marrone Bio, last August closed the Sacramento region’s first successful initial public offering in nearly a decade, when it netted $56.4 million for expansion. In April, Davis-based agricultural biotechnology company BioConsortia raised a $15 million round of funding from Khosla Ventures and Otter Capital LLC. [Mark Anderson, Sacramento Business Journal, May 5, 14]
Columbia Pacific Advisors announced Monday it has a $100 million fund that it will use to invest in tech startups [with] a combination of debt and equity investments .... It's a good time to be a Seattle startup. [Emily Parkhurst, Puget Sound Business Journal, May 5, 14]
Silicon Alley, not yet. investors are still betting on the city. The amount of venture, angel and private equity money invested in New York soared about 200 percent from 2009 to 2013, to $3 billion from $799 million, according to CB Insights, a data analysis firm that specializes in venture capital trends. Silicon Valley, by contrast, took in $11.4 billion in 2013. .... Among the local companies grabbing the attention of investors are Canary, which makes a smart-home security system; FiftyThree, which makes design apps for mobile devices; Kickstarter, the crowdfunding site; Warby Parker, the online eyeglasses retailer; MongoDB, a cloud services firm; AppNexus, an online advertising company; and Shapeways and MakerBot, 3-D printing start-ups. [Jenna Wortham, New York Times, Apr 26] Low tech, business app startups don't have the potential to create a new industry with a high return to society. As such, with ROI relatively predictable, government should let business do business.
not all foreign investors are shell companies or scams. Legitimate Chinese investors are putting enormous amounts of money behind many American companies. Ngo just warned startups to make sure they know something about the firms that are investing in them, and warned other angel investors to keep their eyes open for questionable investors before they invest. Shell companies could be running scams to entice legitimate investors into deals they wouldn't otherwise have made on their own. [Emily Parkhurst, Puget Sound Business Journal, Apr 22]
Connecticut’s largest quarterly tally for venture capital deals in years, $189 million. Kolltan Pharmaceuticals, (New Haven, CT; no SBIR) a cancer-drug developer received $60 million last month from a variety of investors. Kolltan, with technology developed at Yale, is in Phase 1 trials for a revolutionary therapy. .... Melinta Therapeutics (New Haven, CT; no SBIR) now in Phase 3 trials for a drug to treat gonorrhea and other infections with a single pill, received $70 million in February from a group led by Vatera Healthcare Partners, its major current equity owner. [Dan Haar, Hartford Courent, Apr 21, 14]
Backed by investors with up to $500 million in capital, Atlanta-based Medtown Ventures LLC aims to grow the next generation of life sciences companies. ... invests in medical devices, biotech and health IT entrepreneurs .... typically syndicates up to $5 million in individual deals. It also installs a “temporary S.W.A.T. team” of operators who help the founder — typically a PhD or scientist — take the promising fledgling technology to market. [Urvaksh Karkaria, Atlanta Business Chronicle, Mar 20, 14] Want "investment" without a market whipmaster? Join the scrum for free government money, but when the money runs out, no one will care about your company, and the government can use your technology whenever it wants with no royalty.
Founders Co-Op [Seattle] seed stage investment group announced that it has put together a $10 million fund, with the opportunity to increase that fund up to $25 million. ... [with] "commitment to finding entrepreneurs who want to build the next generation of technology market leaders here in the Pacific Northwest." [Emily Parkhurst, Puget Sound Business Journal, Apr 14]
Venture capital firm Santé Ventures increased the size of its latest fund to $139 million. .... founded in 2006, invests exclusively in early-stage companies developing medical technologies or health care delivery models. [Christopher Calnan., Austin Business Journal, Apr 11, 14] The world is awash in capital looking for opportunity for a large return in a short time. But it cannot get a decent return from life-style companies doing good science. Only government wants to fund straightforward engineering mainly for government projects in companies with no prospects for market ROI.
LiveOak Venture Partners is looking to bolster its portfolio with Dallas startups. The Austin-based early-stage venture capital firm, which focuses on funding Texas-based startups, has raised a new $100 million fund [Danielle Abril, Dallas Business Journal, Mar 25]
Capital rushing in. a dynamic that is reshaping Silicon Valley: Start-ups, already flush with cash, are piling on the investment dollars. .... One thing that has changed in recent years is the sheer amount of capital available for investment in Silicon Valley start-ups. .... venture capitalists are increasingly being joined by hedge funds and private equity firms [and mutual funds] chasing huge returns. ..... And on average, between a quarter and just under a third of the late-stage money is being used to buy shares from employees and early investors ahead of an I.P.O. [ DAVID GELLES and MICHAEL J. DE LA MERCED, New York Times, Apr 13]
“The world doesn’t need more start-ups,” Singh said. “It needs more businesses.” ... formally launching a venture fund in Crystal City [VA] that will seek small but established technology enterprises — ones that, with additional capital, he believes can grow into large, powerful companies. [Singh's] company, Disruption Corp., is looking to fill with the launch of its $50 million venture fund, called the Crystal Tech Fund. .... [it will] Offer optional, flexible office space to every company in the new fund’s portfolio. Singh has leased 27,000 square feet in Crystal City .... So far, five technology companies — three from the Washington area, one from Tennessee and one from Texas — have raised money through the fund and started to move into the space. Out of the $50 million, Singh plans to make initial investments of about $250,000 in 30 or 40 companies, leaving most of the money available for larger infusions in whichever companies start to take off. [JD Harrison, Washington Post, Apr 10]
A group of alumni from UC San Diego has created an early stage venture capital fund that will target startup companies created by university students, faculty and graduates. The modest, roughly $8 million Triton Technology Fund unveiled late Wednesday expects to provide capital to entrepreneurs looking to commercialize technology developed at the university. ...part of the larger $40 million technology venture fund, Vertical Venture Partners. Both are run by UC San Diego alumnus David Schwab, a longtime partner with Sierra Ventures. [Mike Freeman, utsandiego.com, Apr 9]
Surprise! Crowdfunding sites such as Kickstarter and Indiegogo represent a classic entrepreneurial phenomenon: Once you roll out your great idea, customers use it in ways you didn’t imagine, and you wind up in a different business than you expected. ..... As a result, the most successful crowdfunding projects aren’t charities. They’re ventures that produce something people wish they could buy. That makes crowdfunding a great way to test the market. [By Virginia Postrel, Bloombeerg View, Mar 28] Or you wind up with no customers because it's too expensive.
An early-stage venture capital firm is looking to bolster its portfolio with Dallas startups. Live Oak Venture Partners, which focuses on funding Texas-based startups, has raised a new $100 million fund and is looking to focus on building a better presence in Dallas. .... primarily offers seed and series A funding that can range anywhere between $25,000 and $2 million. .... will often follow up with the next couple rounds of funding and play active roles in advising. ... focuses on funding IT and IT-enabled service companies [Danielle Abril, Dallas Business Journal, Mar 25]
TechColumbus [OH] has nearly as much money on hand help finance startup companies as it has cumulatively invested, and it’s on the hunt for beneficiaries. ... managing investment funds worth $17 million ... Including $23 million invested from TechAngels and Third Frontier, TechColumbus has $40 million under management. ... In 2013, 431 entrepreneurs applied for funding and 199 made it to an evaluation of their idea and market. Of those, 88 are early ideas that TechColumbus is tracking, and 50 came on board for advising. [Carrie Ghose, Columbus Business First, Feb 24]
Ohio TechAngels has yet to select recipients of its new $7.3 million fund, but the angel investors backing it have a pretty good idea what they’re looking for. The 97 individuals who contributed to the latest fund plan to invest in 14 Ohio-based technology startups, including those in software, advanced materials, sensors and instruments and life sciences. [Evan Weese,Columbus Business First, Feb 14]
Hope springs eternal. The number of companies, raising very real money on crowdfunding sites, that have a cool-looking prototype and technology “to be developed” is staggering. Venture funds are hiring design partners instead of technologists. And they’re investing in pretty, empty boxes. .... Most customers, business or consumer, would much rather buy from an established entity they trust instead of dealing with startup quality assurance, service, and supply chain issues. They will only buy the new product if it fundamentally does something dramatically better, or does something different, than the alternatives, and it takes real technologists and great technology to do that! [Stan Reiss (Matrix Partners), xconomy.com, Mar 14] History says there are lots of gullible people out there with hope and money.
Google has money! Google's growth equity investment wing [the later stage cousin to Google Ventures also with $300M] ... revealing that it has made three investments and has $300 million to work with. .... it has invested $40 million into Renaissance Learning, a Wisconsin education software company. Over the past year it also was involved in private equity rounds for SurveyMonkey and LendingClub. [Cromwell Schubarth, Silicon Valley Business Journal, Feb 19, 14]
Clarus Ventures, which has backed some big Bay Area biotech M&A winners over the past year, is raising $375 million for a third fund, part of a $2 billion or more surge in life sciences VC funds over the past year. .... It invested in the East Bay's FerroKin BioSciences ($100K SBIR) which Shire bought in 2012 for up to $325 million, Redwood City respiratory disease drug developer Pearl Therapeutics (Redwood City, no SBIR), which AstraZeneca bought in June for $1 billion, and eye drug maker SARcode Bioscience (no SBIR) purchased a year ago by Shire for at least $160 million. It also has put money into up-and-comers like cancer drug developer Cleave Biosciences (Burlingame, no SBIR). [Ron Leuty, San Francisco Business Times, Feb 7, 14]
A new hardware startup accelerator has launched in Sunnyvale [CA], offering $1 million in funding and services to companies it accepts. The SKTA Innovation Center is an offshoot of the U.S. wing of Korea's biggest wireless operator, SK Telecom. It plans to match up entrepreneurs who are working on IT infrastructure technologies and products with strategic partners, including SK Telecom itself. [Cromwell Schubarth, Silicon Valley Business Journal, Feb 21, 14] Looking for a perfect
The DreamIt Fund II LP has raised $9.3 million of planned $50 million financing. The Austin-based fund that’s affiliated with business accelerator DreamIt Ventures collected the capital from 28 investors, according to [SEC] filing .... Philadelphia-based DreamIt, which has launched 127 companies since it was established in 2008, is one of several incubators and accelerators operating in Austin. [Christopher Calnan, Austin Business Journal, Feb 28]
Drive Capital announced the closing of a $250 million venture capital fund to invest in early and growth-stage companies [who are creating products that solve problems in the technology, health care and consumer industries] across the Midwest, including Pittsburgh. [Patty Tascarella, Pittsburgh Business Times, Feb 4, 14]
Startups and entrepreneurs are criticizing proposed "crowdfunding" rules designed to ease their ability to reach large numbers of investors online, warning the current restrictions will deter smaller companies from using the financing technique. ..... Chief among the startups' concerns: a proposed SEC requirement that companies seeking to raise more than $500,000 release audited financial information. .... The SEC estimates companies may have to pay nearly $29,000 for an auditor to review their annual statements. [Andrew Ackerman, Wall Street Journal, Feb 27] In a world full of shady dealers, how's a tech biz to prove it's real?
Fund Milwaukee, a grass-roots investment network providing an alternative to traditional business financing, has hit a milestone — more than a million dollars advanced to small local firms. [Milwaukee Journal Sentinel, Feb 11] Not in high-tech firms.
John Taylor, vice president of research at the National Venture Capital Association, said that the biggest funding opportunities for startups across the nation are in corporate venture capital. [which] represented 15 to 20 percent of all the nation's deals last year representing between 6 and 9 percent of the dollars invested, .... Taylor said the success of a startup's cash flow is driven by the exit market strategy. In 2013, 82 companies made an initial public offering that together were worth $11.2 billion. Forty-two of the IPOs were in the biotech industry. [Danielle Abril, Dallas Business Journal, Jan 23, 14]
The Chicago-based venture capital firm Lightbank created “ Startup Guide: Chicago” that aims to share advice on to start a successful business in Chicago’s technology community. [Christine Hall, Chicago Business Journal, Jan 10, 14]
Seventy-one public companies tapped the U.S. stock market last month, a record start to the year and a sign of investors' healthy appetite for growth sectors despite the recent tumult. The companies are clustered mostly in the biotechnology and software-development industries [Telis Demos, Wall Street Journal, Feb 7, 14]
Last year, U.S. angel and venture capital firms invested about $10.7 billion in seed and early stage companies, 17.1 percent higher than 2012, according to data from the National Venture Capital Association (NVCA) and PricewaterhouseCoopers (PwC) Moneytree survey. ... more than any time in the past decade [SSTI, Feb 5]
Cintrifuse [its $51 million Fund of Funds] is investing in a Houston-based venture fund [Mercury Fund’s Ventures III] that has a history of involvement with the Cincinnati startup ecosystem, the company announced .... will also partner with Mercury Fund on initiatives such as its Development Fund, which invests in seed-stage entrepreneurs and startups. [Andy Brownfield, Cincinnati Business Courier, Jan 28, 14]
Dragon Innovation said it will start giving an extra $100,000 to startups that raise seven-figure sums on its website. ... Now, companies can make Dragon Innovation a one-stop shop for crowdfunding and logistical guidance. No one has come close to raising $1 million in Dragon’s short history. .... The bonus money will come in the form of a convertible note, giving Dragon an equity stake if a recipient hits certain thresholds, like raising a funding round of at least $750,000. [Callum Borchers, Boston Globe, Jan 27, 2014]
Google Ventures said in a year-end report that it made 75 new investments and nine of its portfolio companies hit their exits in 2013. .... The four-year-old fund will get another $300 million to invest in 2014, the same amount it got for this year, and has $1.2 billion under management now. It has backed a total of 225 companies. ... Most of the new investments for the year (28 percent) came in the mobile sector, followed by consumer Internet and commerce (each with 18 percent). ... biggest deal of the year was the $258 million funding of San Francisco transportation startup Uber [Cromwell Schubarth, Silicon Valley Business Journal, Dec 16, 2013]
Software gets the money. Venture investments in both software and Internet-specific deals last year amounted to $18.1 billion, or nearly 62 percent of the $29.4 billion total that VCs invested in all industries nationwide, according to the end-of-year MoneyTree Report. [Bruce Bigelow, xconomy.com, Jan 17] Why software? For one, the low technical uncertainty, the reason that government does not need "market failure" programs.
LiveOak Venture Partners is closing its first fund of about $100 million. The firm, founded by three former Austin Ventures investors, plans to back 15 to 17 early-stage technology companies, with the vast majority of them in Texas and the Southwest. [Lori Hawkins, Austin American Statesman, Jan 9] Focuses on info-tech.
Arch Grants is asking leaders at a number of Wisconsin universities to spread the word that the St. Louis-based nonprofit wants to give selected start-ups $50,000 and free support services for a year. [Milwaukee Journal Sentinel, Jan 7] Arch Grants selects promising startups to receive $50,000, [plus] the opportunity to secure a second round of up to $100,000 in funding along with direct access to St. Louis-based angel investors..... partners with comparable economic development endeavors in St. Louis that currently support business growth in the city [fund website]
A $20 million venture capital fund has been created to help startup companies in Colorado, according to the Northern Colorado Business Report. The Colorado Enterprise Fund and the Rocky Mountain Innosphere are behind the fund, called the Colorado Catalyst Fund. ... modeled after similar programs in other states, but until now none has existed in Colorado. [Denver Business Journal, Nov 20] We shall see whether such a fund can profitably invest in companies based first on geography. The track record on state investing does not give much confidence as politics meddles.
Vital Therapies (San Diego, CA; no SBIR) and ’s TetraLogic Pharmaceuticals (Malvern, PA; no SBIR) both postponed their IPOs yesterday, according to the IPO research firm Renaissance Capital. [Bruce Bigelow, xconomy.com, Nov 22, 13]
Last week, Celladon (San Diego, CA; no SBIR) , Xencor (Monrovia, CA, $800K SBIR) and Palo Alto’s CardioDx (Palo Alto, CA; no SBIR) all postponed their IPOs. [Bruce Bigelow, xconomy.com, Nov 22, 13]
VC competition. BrightStar Wisconsin Foundation Inc., a new group with an unusual plan for using charitable donations to make venture investments in young state companies, said the IRS has cleared it to operate as a tax-exempt organization. [Milwaukee Journal Sentinel, Nov 25]
Fewer IPOs, fewer jobs. Until the last decade, about 300 start-up companies went public each year, with more than half of those companies being small cap IPOs. Fast-forward to the most recent decade, and fewer than 100 companies each year have gone public, with less than one-third of those being small cap IPOs. According to the Kauffman Foundation, small caps increase their post-IPO hiring by 156%. As a result, the small cap IPO doldrums have cost us an estimated 1.9 million new jobs. [Scott Kupor, Fortune, Nov 11] "Jobs" seems the favorite word of political economy argument, but getting the whole argument right is tricky business, too tricky for sound bite exchanges in a Twitter world. Therefore, NEVER ACCEPT a jobs pronoucement that does not consider the whole jobs environment that includes existing jobs lost for every new job created.
500 Startups (Mountain View, CA) the accelerator that just last month closed a funding round with $44.1 million, is going back for another $100 million. The accelerator plans to raise the money in a third round that will be used for seed-stage and follow-on investments, according to its SEC filing. ....plans to make 200 investments in the next year, continuing to cap initial stakes at $250,000. [Vincent Lara-Cinisomo, Web contributor, Silicon Valley Business Journal, Oct 17, 13]
Seats near the money table are dear. Sand Hill Road is still the king of the hill, at least when it comes to office rents. Jones Lang LaSalle's new survey of the nation's most expensive streets for office leasing place the venture capital nexus in Menlo Park at the very top -- right atop Manhattan's Fifth Avenue. Average full-service rents on the street were $110.76 per square foot annually ($9.23 a month), compared to $102.02 for Fifth Avenue. [Nathan Donato-Weinstein, Silicon Valley Business Journal, Oct 1] One big difference is the weather, but if you need capital and smart people, the competition in the major league is fierce , and ....
Investors are stampeding into [IPO]s at the fastest clip since the financial crisis, fueling a frenzy in the shares of newly listed companies that echoes the technology-stock craze of the late 1990s. .... To some of course, the demand is an indication that a rally fueled primarily by abundant liquidity from the Fed, and not by earnings growth and economic expansion, is entering dangerous territory. [Matt Jarzemsky and Telis Demos, Wall Street Journal, Nov 4] For SBIR tech type companies (stuff a government would fund) the parade seems aiming elsewhere.
Business microlender Accion San Diego graduated the first class of business owners from its new Accion Academy for Entrepreneurial Success this week. The eight-week education-based loan program, which launched on Aug. 27 with 22 students, is designed to help would-be entrepreneurs develop their ideas into viable business plans — plans solid enough to qualify for the financing needed to get them off the ground. [Katherine Poythress, utsandiego.com, Oct 16]
Global Cancer Diagnostics is a finalist for the National Small Business Crowdfunding Contest. for emerging small businesses. ... a medical laboratory that seeks to diagnose cancer at an early stage ... winner will be announced Sept. 23 [Tim Gallen, Phoenix Business Journal, Aug 21, 13]
OK to beg for money. On Sept. 23, the Securities and Exchange Commission will lift an 80-year ban on what is known as “general solicitation,” allowing entrepreneurs to start advertising investment opportunities in their businesses through various outlets, including social media channels and new online financing portals, known as crowdfunding sites. [JD Harrison, Washington Post, Sep 16]
Money comes with a voice. Vinod Khosla’s recent comment during an interview with Michael Arrington that 95 percent of VCs don’t add value (and that 70-80 percent might actually add negative value in their advising) [Bob Hower, xconomy.com, Sep 16] Face the facts that you need Other People's Money.
Yale is taking a step to speed up the startups, creating a $2.5 million venture fund along with Connecticut Innovations, the state’s technology investment arm. The YEI Innovation Fund will invest as much as $100,000 in companies that launch through the Yale Entrepreneurial Institute, a startup mentoring program at the university that runs a summer fellowship. .... The institute’s success is starting to add up, with 75 active companies that have raised $66 million and created 300 jobs. But only 70 of those jobs are in Connecticut, in part because firms must follow the money to Silicon Valley, Boston and New York [Dan Haar, Hartford Courent, Sep 10]
MediBeacon is one of 40 companies to receive funding from BioGenerator, which has invested $5 million in startups since 2004. Collectively, the 40 have secured an additional $132 million in follow-on funding, according to Donn Rubin, president and CEO of BioSTL, a local organization [EB Solomon, St. Louis Business Journal, Aug 30, 13]
Innovation Fund North Carolina plans to award up to $1.2 million to [NC] startup technology companies .... An informational meeting will be held at Packard Place in Charlotte at 1 p.m. Sept. 17. All startups with interest in the cash are invited to attend.
Shrinking startup capital. David Gold, managing director of Westminster[CO]-based Access Venture Partners, said his fund is one of the few locally left doing Series A investments, or the first significant round of venture funding, in local companies. [Heather Draper, Denver Business Journal, Aug 30]
SightLine Partners has raised $107 million for a fund that will back late-stage medical-technology companies, the firm announced. The Minneapolis-based company won't invest in startups, but will shore up device makers that are struggling to raise the capital they need to get across the finish line. SightLine also is targeting investors in those firms, some of which are eager to sell their stakes in startups. [Katherine Grayson, Minneapolis / St Paul Business Journal, Aug 8, 13]
GlaxoSmithKline (UK) said it has launched a $50 million venture capital fund to invest in companies pioneering bioelectronic medicines and technologies. ..... The fund has already made its first investment in SetPoint Medical (Valencia, CA; no SBIR) creating implantable devices to treat inflammatory diseases. ... intends to build a portfolio of five to seven companies — start-ups or existing companies developing technologies stimulate or block electrical impulses — over the next five years [John George, Philadelphia Business Journal, Aug 8, 13]
Six companies saw U.S.-listed IPOs price Aug 8, the most in a single day since May 8, according to Dealogic. [Matt Jarzamsky, Wall Street Journal, Aug 10, 13] No SBIR companies.
BizLab (Menomonee Falls, WI) that describes itself as a business incubator, is eliminating 34 jobs..... was honored by the Metropolitan Milwaukee Association of Commerce with inclusion on the "Future 50" list of rapidly growing local companies. [Rick Romell, Milwaukee Journal Sentinel, Jul 30]
NCT Ventures expects within weeks to launch a second fund of about $50 million to invest in early-stage Ohio technology companies. [Carrie Ghose, Columbus Business First, Jul 12, 13]
This [biotech] IPO party won’t last long, probably no more than a few months. There are only so many good private companies worthy of graduating to the public markets. [Luke Timmerman, Xconomy.com, Jul 22]
OncoMed Pharmaceuticals soared 60 percent after the company raised $82 million in an [IPO] ... develops monoclonal antibody therapeutics that target cancer stem cells ... has collaboration agreements with GlaxoSmithKline for the development of two of its drug candidates, each with possible payments of up to about $350 million. [Silicon Valley Business Journal, Jul 18, 13]
Silicon Valley startup mentor and investor Peter Relan announced 9+, a new incubator program with a group of investors and entrepreneurs who will coach 24 teams a year in nine-month sessions. [Cromwell Schubarth, Silicon Valley Business Journal, Jul 11, 13]
change by the [SEC] requires investors to document their qualifications to prove they’re accredited instead of the previous method of self-certifying. The Missouri-based Angel Capital Association says it will have a chilling effect on investors. [Christopher Calnan, Austin Business Journal, Jul 16]
Drexel University this week announced the creation of Drexel Ventures [that] will oversee Drexel’s technology-transfer efforts, a newly created seed fund, and an incubator for companies that are started by Drexel faculty, students or alumni or with Drexel technology. .. [U President] Fry wants to capitalize Drexel Ventures with $10 million to $20 million to create an endowment. [Peter Key, Philadelphia Business Journal, Jul 5]
The IPO market is on pace to have its best year since 2007. ... a large pipeline of technology, consumer discretionary and biotech firms set to go public — but they all have large market capitalizations compared with the last time that IPOs were popular. .... As the Federal Reserve prints more money and interest rates remain low, an increasing percentage of capital is flowing into risky asset classes like venture capital and “angel investing.” This capital has chased up valuations in the pipeline preceding IPOs, making the IPOs themselves feel more like the end of the journey, not the beginning. [Howard Lindzon, utsandiego.com, Jul 7]
Boston investment firm Allied Minds, which puts money into technologies from research universities and federal labs, has added another $100 million to its investment pool. That puts the firm’s overall assets at $500 million, Allied Minds said in a press release. No word on who the firm’s investors are. Allied Minds says it has “created more than 26 companies, including six in the past year.” [Curt Woodward, xconomy.com, Jun 26]
A former Siemens Venture Capital partner is launching a new VC firm [Forté Ventures, launched by Tom Hawkins] — raising a $30 million to $50 million fund that will co-invest in technology deals alongside Wall Street blue chips such as Siemens, IBM and Merck. [Urvaksh Karkaria, Atlanta Business Journal, May 31, 13]
Austin Ventures LP is reportedly [plans to raise a $450 million fund to focus on] going back to targeting the type of companies that helped it grow initially — early-stage startups. Bloomberg reported .... In 2011, Austin Ventures petitioned federal regulators to remain classified as a venture capital firm to avoid the more stringent reporting regulations proposed by the Dodd-Frank Wall Street Reform and Consumer Protection Act. [Christopher Calnan, Austin Business Journal, May 24, 13]
In the first three months of 2013, nationwide venture funding fell 12 percent compared to the previous quarter, according to the MoneyTree report. The association and PricewaterhouseCoopers compile the data with Thomson Reuters [Peter Delevett, San Jose Mercury News, May 19]
Tableau Software (Seattle, WA; no SBIR) data-visualization company burst onto the public markets Friday with a steller public offering, jumping 64 percent from its initial $31 price. [Brier Dudley, Seattle Times, May 19, 13]
venture capitalists here and around the country are bailing out of cleantech in droves, spooked by low returns and an uncertain political landscape. .... [NVCA says] Investments in alternative energy and related fields have dropped for five of the past six quarters. [Peter Delevett, San Jose Mercury News, May 13]
Fewer angels, more money. Funding for the earliest stage companies by angel investors hit $22.9 billion last year, a 1.8 percent bump over 2011, but the total number of individuals willing to risk money by backing the earliest stage companies fell by 15.8 percent. [Michael Farrell, Boston Globe, Apr 25, 13]
The New Mexico State Investment Council approved $10 million for Sierra Ventures of California. .... will invest in 15 to 20 startups, although only some of them will be in New Mexico, the Journal reported. [Gary Garew, Albuquerque Business First, Apr 24] Apparently ROI will take precedence over local job creation in new industries.State gives subsidized loans .. The announcement included laudatory quotes from politicians. ... Connecticut will borrow the money to fund the 10-year loans. [Hartford Courant, Apr 24, 13] Government competing with private capital for pure business risk investment - must be a Democratic state, although any money pushed to constituents will elicit laudatory comment from politicians.
IPOs Moving. With this month's soaring stock
three Silicon Valley
companies -- two of them in long-neglected tech sectors -- Wall Street
appears to have officially moved past the tech stock uneasiness that
emerged after Facebook's flop last spring. A new report by Ernst
Young shows that far more
companies went public than expected in the first quarter of this year,
and the trend seems sure to accelerate with the recent IPO successes of
Silver Spring Networks,
Model N and
Delevett, San Jose Mercury News, Mar 25]
Third Rock Ventures, a Boston venture capital firm targeting innovative life science start-ups, said today that it has raised more than $500 million for a new investment fund. .... prefers to invest in start-ups instead of established companies [around Boston] [Taryn Luna, Boston Globe, Mar 25] The SBIR myth that there's too litle capital for start-up tech business is just that - myth. But politics relies on myths to get itself elected. If you have a technology with a future, if it works, you can find capital if you go where such capital lives. If you stay in a comfy remote area, say Kentucky or Montana, your chances are poor of getting capital and, even worse, of succeeding as a business even if you do get some early capital. The more your technology advances in certainty, the more capital you will need for its development as a business. That second phase capital is usually more than the locals angels are good for.
New capital sources. Even as some venture-capital firms have become skittish after the disappointing initial public offerings of Facebook, Groupon. and ZNGA —all of which were venture-backed—a number of hedge funds, private-equity firms and other asset-management firms are pouring money into closely held startups. With many traditional sources of returns dried up, these investors are seeking to capitalize on the rise of young technology companies even if they may not go public for a while. Investment into U.S. venture-backed companies was down 15% to $29.7 billion for all of 2012. ....Some entrepreneurs said they welcome nontraditional startup investors because they are more likely to hold onto their shares for an extended period even after a company goes public. [Shira Ovide and Pui-Wing Tam, Wall Street Journal, Mar 8]
A new angel fund - the first to focus on very young companies in southeastern Wisconsin - has launched with more than $5 million to invest. Organizers of the Wisconsin Super Angel Fund raised money from more than 40 investors ...will invest in three to five companies a year with an average investment of about $500,000, Torinus said. It will invest in high-potential companies across industries as long as they are within a 2 1/2 hour drive of Milwaukee [Kathleeen Gallagher, Milwaukee Journal Sentinel, Feb 26] Money hates management by remote control, which why politicians are dreaming when they put capital into companies isolated from investors and markets. But as long as every state has two Senators, government capital will be inefficiently invested. It will, instead , be spent for temporary jobs that will last until the next election.
Last year venture capitalists invested $26 billion in U.S. companies, a quarter of the $105 billion they invested in 2000. Capital commitments to venture funds, which stood at $103 billion in 2000, were below $18 billion. .... For the 12 months ended September 30, 2012, venture capital funds returned 7.7 percent, compared with the 26.5 percent return of the [DJIA] [Udayan Gupta, Institutional Invester, Feb 19]
The Northwest Energy Angels invested nearly $4.7 million in 15 companies last year, a record for the cleantech investing group, as we reported in December. Eight new investments spanned sectors including lighting, energy efficiency, data management, and power electronics. NWEA’s elevated activity in 2012 came against the backdrop of declining venture investment in cleantech. [Benjamin Romano, xconomy.com, Feb 15]
angel investors have been funding more firms.“If you look at the last 10 years of activity from the University of New Hampshire data on angel investment, the number of investments has gone from 38,000 to 66,000,” John Backus, managing partner with New Atlantic Ventures, said in a conference call. Meanwhile, venture capital deals in early-stage companies have increased from about 1,100 to 1,600 in the same time period, he said. .... Angel investing nationwide grew 12.1 percent to $22.5 billion in 2011, according to the Center for Venture Research at the University of New Hampshire. [Mike Freeman, utsandiego.com, Jan 31]
The Oregon Angel Fund has already raised $2.25 million for its 2013 fund, according to securities filings. Each year the fund raises money and invests in five promising startups. Last year's fund — $4.7 million —was its largest ever. [Portland Business Journal, Jan 24]
Angelpocaplypse. An apocalypse is poised to sweep through Silicon Valley, obliterating hundreds of new companies and evaporating hundreds of millions of dollars of angel investor cash. ... as a glut of startups fail to secure Series A funding from venture capitalists, said researchers and investors like Ron Weissman of Band of Angels, the oldest angel group in the U.S. .... Mortality among angel-funded companies is always high (A Harvard study last year found 75 percent of startups die.). ...the new prospect of Ma and Pa investors investing in seed-stage companies through crowdfunding threatens to spray yet more money into a system that even professional investors inflated to bubble proportions. In the U.S., as many as 1,400 startups that were funded in the past two years will be orphaned when venture capitalists deny them additional funds, according to a December report from CB Insights. [Cromwell Shubarth and Greg Bauman, Silicon Valley Business Journal, Jan 25, 13]
Crowdfunding gets going. The AngelList site prominently posts stern caveats, stating bluntly, "Startups are very risky investments. Expect to lose your money." AngelList also warns that it doesn't verify the information posted by startups. ... Catherine Mott, a retired entrepreneur in Pittsburgh who has been an angel investor since 1999, says she won't back a company until she—or a member of the 65-member local angel group she leads—has spent at least 20 hours of face time with its founders and team. [Sarah Needleman and Lora Kolodny, Wall Street Journal, Jan 24]
Investment into U.S. venture-backed companies totaled $6.9 billion across 820 deals in the third quarter, the latest data available, down from $10.1 billion and 906 financing deals in the year-earlier period, according to research firm VentureSource< [Pui-Wing Tam, Wall Street Journal, Dec 26]. Particularly down is investment in internet companies after waking up from the Facebook dream.
“There are no V.C.s in Iowa to sustain what we could potentially need to go crazy.” .... according to the National Venture Capital Association, Silicon Valley’s money spigot remains a trickle once you get beyond satellite hubs like New York and Boston, plus a few attractive small cities like Boulder and Austin. .... A Palo Alto business that gets a cash infusion can poach talent without asking new hires to relocate across the country. [Lydia dePillis, The New Republic, Dec 6] Which says that government handout programs, like SBIR, are merely pandering to local "fair share" ideas in some idealistic theory that all innovations are created equal.
Venture capital funding raised by Triangle companies has fallen significantly since peaking in 2007, and the $82.8 million in venture capital that local companies attracted over the first three quarters of this year is by far the lowest total since The News & Observer began reporting the quarterly numbers in 1999. [David Ranii, Raleigh News & Observer, Nov 10, 12]
venture capital funding by state officials. Xolve (Middleton, WI; no SBIR) a nanotechnology company, received $2 million the result of WHEDA's participation in the State Small Business Credit Initiative, which was created as part of the federal Small Business Jobs Act of 2010 to make capital more accessible to entrepreneurs and small businesses. Wisconsin received $22.4 million for small-business lending programs to help create private sector jobs. WHEDA is administering the program funds. Xolve and Hopster are the state's first recipients.[Paul Gores, Milwaukee Journal Sentinel, Oct 12, 12]
Venture-capital investment in Minnesota companies rebounded in the third quarter, with med-tech firms leading the way. The state’s startups raised at least $100 million during the quarter, though that figure includes a $20 million round for Mainstay Medical (no SBIR) — a device firm that plans to move its from the Twin Cities to Dublin, Ireland. .... Torax Medical (Shoreview, MN; no SBIR) announced it pulled in $30 million,plans to use the funds to boost marketing of its device for treating acid reflux disease. and Segetis (Golden Valley, MN; no SBIR) “green” chemistry company. raised a $25 million round led by the venture-capital arm of Saudi Arabia-based manufacturing giant Saudi Basic Industries Corp.[Katherine Grayson, Minneapolis /St Paul Business Journal, Oct 12, 12]
The amount of seed money invested in the U.S. dipped to $65.36 million in the second quarter from $92.86 million a year earlier, according to Dow Jones VentureSource. ....Silicon Valley investors and entrepreneurs have begun devising new types of financing terms to try to address issues that cropped up with the haphazard approaches to seed investing in the past. One new method is a "convertible equity" investment. [Jessica Vascallaro, Wall Street Journal, Oct 5]
Venture capitalists have slashed their spending, dumping more adventurous companies in the process, not least because around 90% of them failed to produce a positive return. [The Economist, Sep 29] Small biz that can't cut it in the marketplace line up for government hand-holding with a sob story about fair share and job creation. Politicians hand out the money with no requirement that the program prove its worth beyond greasing squeaking wheels.
Precision Ventures (Waltham, MA; no SBIR) has raised $780,000 in equity from 36 investors, according to [SEC filings] .... [one VC website] The website describes Precision Ventures as having “six successful license deals with a royalty stream over $2MM annually.” [Don Seiffert, Mass High Tech, Aug 7, 12]
New Enterprise Associates has closed one of the largest venture funds ever raised at $2.6 billion after a fundraising that uncovered "enormous interest in venture capital as an asset class," said Peter Barris, the firm's managing general partner. ... invests globally in health care and technology, looking to spread its initial investments across early-stage and growth-equity financings [Russ Garland, Wall Street Journal, Jul 25]
Life science venture capitalists are apparently hitting more of their investments out of the park. There were 17 so-called “Big Exits” for investors in privately held biotech companies, and 18 in the medical device business in 2011, the most of any year since 2005 in a new set of data analyzed by Silicon Valley Bank. [Luke Timmerman, xconomy.com, Jul 19]
An adjustment in the state's angel investor tax credit last fall led to a dramatic increase in angel investments, Connecticut Innovations said Friday. Under the change, part of the jobs bill passed by the legislature last year, the tax credit was available for angel investments of as little as $25,000, down from 100,000 previously. In the first six months after the change, 84 investors pledging $8.6 million in 23 companies applied for the program, according to CI, the state's technology investment agency. That compares with 13 angel investors pleding $2.4 million in nine companies in the six months prior. [Hartford Courant, Jun 8]
Why not Grand Rapids? A young member of a prominent Michigan family known for its wealth, its power in political circles, and its philanthropy has launched a new endeavor to try to stoke the flames of entrepreneurship in West Michigan. .... Last month, Rick DeVos launched Start Garden, a $15 million seed fund. What makes it different from other funds is that Start Garden invests in increments. Every week, the fund invests $5,000 in two ideas for potential companies: one picked by Start Garden and one selected through a public vote. (Anyone with a Facebook account can vote for five ideas per week.) [Sarah Schmid, xconomy.com/Detroit, May 24] Grand Rapids has put a lot into its downtown where a prosperous furniture once stood, and now has several competitive museums to attract traffic.
FA Technology Ventures, the region’s largest venture capital firm, is raising its third fund. The Albany- and Boston-based venture capital firm has more than $100 million in investments under management in companies that focus on everything from software to nanomaterials for the petroleum industry. [Richard D'Errico, The Business Review (Albany), May 18] The idea that government needs to supply venture capital to small tech biz in mostly ludicrous. Where profit lurks, investors will come. The only market failure that would justify handouts like SBIR are high technical uncertainty, too high for ROI calculation, for technologies with a market future if they can be made to work. All the rest of SBIR is mere special political pleading.
Naval Ravikant, chief executive of AngelList, told attendees at the NVCA annual meeting that he expects the number of successful starts to grow, The Wall Street Journal reports. The early-stage investor and matchmaker said there's been a huge jump in fundings from VCs and newcomers for seed-stage companies. Ravikant attributed low-cost Internet resources as one reason the number of startups is increasing. [Austin Business Journal, Apr 30]
The money is flowing again: Venture capital investing in Austin companies soared in this year's first quarter, thanks to a boost from six deals that topped $10 million. .... a 204 percent jump over the $90.2 million that companies received in the first quarter a year ago. It's also the most money raised since the fourth quarter of 2007 when the U.S. recession officially began. [Lori Hawkins, Austin American Statesman, Apr 20] In contrast, Just a few Triangle companies succeeded in raising venture capital funding in the first quarter, and collectively they didn’t raise very much. The $11.8 million in venture capital attracted by four up-and-coming companies was the Triangle’s worst quarterly showing in more than a dozen years. [David Ranii, Raleigh News & Observer, Apr 20]
The Ohio State University and Ohio University announced a new $35 million venture capital fund to address the lack of critical, early stage funding for innovative technology ventures in the state. Ohio State will contribute $20 million and Ohio University will provide the remaining $15 million. The universities also committed to leveraging their resources and assets to support entrepreneurial activity and venture creation in Ohio. [SSTI, Apr 12]
Venture capital spending in Texas increased during third quarter 2011 by more than 100 percent on a quarter-overquarter basis, to almost $600 million. The figure was 59 percent more than the year-earlier period. The activity, marking the single strongest quarter for Texas since 2001 [Jackson Thies, FedReserveBnkDallas, 1Q12]
Though [crowd funding] is being tried, in different ways, on sites like Kickstarter.com and Kiva.org, it is still very much an experiment, and its real-world benefits for small investors are still uncertain. [Robert Shiller, NY Tinmes Apr 8]
Angel investors shelled out $22.5 billion in investment dollars during 2011, up about 12 percent from the previous year’s total, according to the 2011 Angel Market Analysis released by the Center for Venture Research at the University of New Hampshire.[Boston Globe, Apr 2]
biotech firms are tightening their belts and scrambling to come up with creative sources of funding. Some are hiring fewer scientists and contracting out key tasks, such as synthesizing potential drug candidates. A few have closed their doors for lack of funding, while others seek out funds from wealthy backers overseas, money from new pharmaceutical-company initiatives or help from private foundations, people in the industry say. .... Venture capitalists can't cash out like they had. For years, an initial public offering provided a clear return for investors. But in 2011, there were eight IPOs of venture-backed biotech companies, raising $517 million; that was down from 19 IPOs in 2007 that raised more than $1.2 billion, according to the MoneyTree Report. [Jonathan Rockoff and Pui-Wing Tam, Wall Street Journal, Mar 19]
Angel investors took[Wisconsin] by storm last year, putting more than $61 million into small, high-potential companies. That was about two-thirds as much as venture capitalists, who invested nearly $92 million in state companies in 2011, according to a report released by the Wisconsin Angel Network. [Kathleen Gallagher, Milwaukee Journal Sentinel, Mar 15]
Foundation and Maryland
Technology Development Company (TEDCO) announced the Propel Baltimore
Fund — a $3.3 million angel investment fund targeted at startups and
entrepreneurs in Baltimore. The fund will invest in technology
that are located
in Baltimore or are willing to relocate to the city.
[SSTI, Mar 7]
Tax breaks for angel investors have cropped up in recent years in about two dozen states as a means of stimulating job growth. But the effectiveness of the incentives—which range from breaks on 15% of funding in Colorado to 100% in Hawaii—are coming under greater scrutiny, particularly as states face budget pressure. Many states' programs expired at the end of 2011, were stripped of funding or were placed under a moratorium. [Angus Loten, Wall Street Journal, Feb 2] State handouts lack long-term vision as politicians want high ROI by the next election. SBIR handouts survive because they do not require appropriations and are seen as just another political nuisance by the agencies which capture it as best they can for their own purposes. And neither jobs nor economic growth is their mission.
Bain Capital’s venture group has raised a $600 million for a new venture capital fund, a spokesman for the Boston firm confirmed. The new fund will invest in technology start-ups as well as in larger deals. [Beth Healy, Boston Globe, Jan 30]
Access to capital for early stage technology and life sciences companies is a worldwide problem with no easy fixes in sight. .... CONNECT was started in San Diego in 1985 to nurture early stage technology and life sciences companies. Since then, it has assisted in the formation and development of more than 3,000 companies in the San Diego region, and its model has been emulated around the world. ... When we asked how the angels had done in the deals, everyone told us the same tale. The angels had not done well financially. They had not had a good experience, and so capital has become even more gun-shy. In many cases, instead of supporting the local entrepreneurs, the smart capital, the super angels, have begun to look abroad—to the United States and Silicon Valley in particular. ....Michigan is new to the game. Long dependent on the auto industry Michigan has now realized that it must develop an entrepreneurial culture, and it’s blessed to have a great research university—the University of Michigan. The state has committed $1 billion over a period of years to the creation of high-tech and life sciences companies, according to Paula Sorrell, managing director of entrepreneurial services for the Michigan Economic Development Corporation. Much of this is being invested in venture funds that invest in early stage Michigan companies. The state is also investing in pre-seed funds that provide up to $250,000 and in support organizations like CONNECT. [Neil Senturia and Barbara Bry, utsandiego.com, Dec 27, 11]
Wisconsin companies raised $72 million in venture capital in 2011, a 40% drop from a year earlier, according to figures released Friday. The decline contrasted with venture investing nationally, which rose 22% to $28.4 billion, according to the MoneyTree Report by PricewaterhouseCoopers LLP and the National Venture Capital Association. [Kathleen Gallagher, Milwaukee Journal Sentinel, Jan 20]
A $1 million gift to the Tech Coast Angels from the family of slain TCA member and life sciences investor John G. Watson has enabled the angel group to establish a nonprofit foundation to support entrepreneurism in the San Diego region. [Bruce Bigelow, xconomy.com, Jan 12, 12]
Advice with a cuppa. Joshua Baer, 36-year-old entrepreneur arrived here in 1999, recruited out of Carnegie Mellon University's School of Computer Science by Trilogy Inc. Since then, he has sold one company and started two more, and invested in more than 25 local startups and advised countless entrepreneurs. His efforts to mentor Austin's newest wave of young companies include formal projects, such as the launch of tech accelerator Capital Factory, as well as informal ones, such as weekly office hours at West Lake Hills coffee shop Lola Savannah, where anyone can schedule a free 20-minute business brainstorming session. My hobby is startups. I don't watch sports or anything like that." [Lori Hawkins, Austin American Statesman, Jan 1]
Next year could be a fundraising drought for promising medical device start-ups in Minnesota. Venture capitalists are feeling less confident about making investments in 2012, with 58 percent of them predicting fewer investments in biopharmaceutical and medical device businesses, according to a national survey from the National Venture Capital Association. [Wendy Lee, Minneapolis Star Tribune, Dec 27]
Let’s say you are that ambitious postdoc at the Salk Institute, or that microbiologist picking up a business degree at Rady or San Diego State, what should you expect from [VC Steve]Jurvetson? ... What will be waiting for you and your business plan? We look for people with infectious enthusiasm,” he replies, “individuals who convince us that they have the best thing ever. That make us jump out of our seats. We look for intellectual agility and, frankly, for enough self-confidence that you can still be humble, that you don’t pretend to have all the answers like a salesperson.” There’s got to be that dream of innovation, an explanation of how “what you got” will change the world in 20 years. But don’t forget, this is no longer just about research science, not when you step out of the cab. VC’s are into 10X returns, with 100X oh-so-much-sweeter. [Steve Chapple, signonsandiego.com, Dec 19] To make life easier for San Diegans on Biotech Beach, Jurvetson is moving money South from Silicon Valley.
[Boston VC] launched a new biotech focused on metabolic disorders and obesity, feeding it $34 million in a Series A round and renaming it Ember Therapeutics. .... Initially established in September 2010, was called Adipothermics ... focusing on what it terms “recent breakthroughs in understanding the mechanisms of selective insulin sensitivity,” and on the biology of what is called the good body fat, or brown fat. [Mass High Tech, Dec 15, 11]
More angels seek ideas. Of the $8.9 billion in total investments by angels in the first half of this year, 39% went into seed and start-up ventures, up from 26% of $8.5 billion in total investments over the same period in 2010, according to data from the University of New Hampshire's Center for Venture Research. [Angus Loten, Wall Street Journal, Dec 15, 11] to fill a hole created by VCs fewer dollars will flow to start-ups--73% of venture capitalists expect fund-raising among venture firms to stay the same or decline, as limited partners such as pension funds and university endowments proceed cautiously in a still-struggling economy and remain wary of the venture industry after more than a decade of generally lackluster returns [Zoran Basich, Wall Street Journal, Dec 15, 11] Both are looking for ROI, not sweet technology which is only a pathway, not an objective. .
VCs for cheaper health. Over the past two decades, venture capitalists helped make possible striking advances in health care, including robotic surgery, cancer vaccines and genomics. But such innovations also fuel higher health-care spending, and now private investors see new opportunities in betting on companies that could curb those costs. America’s health-care spending is “twice what it was 10 years ago, and it’s forecasted to grow in an unaffordable way for the country,” said John Doerr, a Kleiner Perkins Caufield & Byers partner ... The share of venture dollars flowing to seed and early-stage investments in biotechnology and medical devices has plummeted since 2007 ... Venture capitalists are still looking for strong companies in all sectors – drugs, devices and services – but cost concerns and other factors have led to changes in demand. Investors are wagering that customers will pay attention to the promise of lower costs. [Christopher Weaver, Washington Post, Nov 6, 11]
From our vantage point at Atlas, [Corpoorate Venture Capital] investing has without question been a good thing for early stage life science innovation. During a period where many of our venture brethren have focused on later stage deals, CVC involvement has brought smart coinvestors to our syndicates, deep pockets of capital, abundant advice & guidance from their R&D organizations, and market “validation” of downstream Pharma interest. [Bruce Booth, Forbes, Sep 25]
Merck has established the new Merck Research Venture Fund (MRVF) with $250 million to invest around the world ... making strategic LP investments in a small number of geographically diverse life-science venture firms. While we expect to make direct investments in biotech companies in the future, we are not yet doing so,” says Merck spokesman [Luke Timmerman, xconomy.com, Sep 15, 11 ]
Wisconsin should invest $350 million in as many as 20 venture capital funds over time to address its venture capital shortage and help develop more job-creating companies, says a new white paper from a coalition formed by the Wisconsin Technology Council. The money should be spread across all stages of funding, from seed to growth, and it should target companies with the potential to create high-growth, high-wage jobs, the paper says. [Kathleen Gallagher, Milwaukee Journal Sentinel, Sep 16] Spend public money to subsidize private firms in pursuit of private profits is usually called "corporate welfare". And the return to the public treasury is usually ephemeral. Look to the Texas Emerging Technology Fund for clues about what can go wrong when politicians decide who gets public money.
More than half of the initial public offerings making their debuts in the U.S. this year, including Pandora Media and Renren, are trading below their offer price, an ominous backdrop for any companies hoping to come public. [Wall Street Journal, Sep 14]
Less talking, more doing. Michael Arrington, whose influential TechCrunch blog covers Silicon Valley, has started a venture capital fund to invest in start-ups, including some that he and his staff write about. [Claire Cain Miller, New York Times, Sep 2]
Last week, nine of 12 companies with pending IPOs yanked them off the table. Currently, there is only one IPO scheduled over the next month ... The problem now is not just that the IPO window may be shut. It's that so many people in the tech ecosystem have made plans and assumptions based on the belief that the indicator arrows on the stock markets and economy would keep moving up and to the right. [Chris O'Brien, San Jose Mercury News, Aug 13]
San Diego is responding to the lack of venture capital by self-organizing, by working together, by formalizing new processes, by presenting companies to sophisticated groups. Many years ago, CONNECT was one of the few resources available to early-stage entrepreneurs, then along came Tech Coast Angels and too many other groups to name, and now there are events every week, all focused on trying to encourage, support, nurture and, yes, find young companies in San Diego that can create and thrive. [Neil Senturia and Barbara Bry, serial entrepreneurs who invest in early-stage technology companies, signonsandiego, Aug 9]
Illinois boosted to 2% its allowed investment by its Technology Development Account in venture capital firms that in turn invest in technology-based businesses. Companies may use the funding for R&D, marketing new products and workforce expansion. [SSTI, Jul 28]
The reality is that venture capital follows innovation. Such investors seek out companies that already have working products and proven business models. Venture capital doesn’t stimulate innovation; it wants in once it looks like a good bet. [Vivek Wadhwa,Washington Post, Jul 31]
A recent survey of venture capitalists indicates they aren’t putting much stock in the Midwest. When asked to select the geographical region that represents the area of the “hottest investment opportunities,” half of the roughly 100 venture capitalists surveyed said the West Coast, according to Massachusetts-based Polachi Inc., an executive search firm.The East Coast received 39 percent of the vote and even the South received two percent. Ten percent of venture capitalists surveyed said the hottest investment opportunities were outside the U.S. The Midwest and Northwest didn’t get a single vote. Venture capitalists are feeling more confident about the state of their industry, according to the survey. About 55 percent of those surveyed said they are most optimistic about the exit markets, according to Polachi. [Wendy Lee, Minneapolis Star Tribune, Jul 1]
According to the National Venture Capital Association, venture capitalists invested $5.9 billion in the first three months of the year, up 14 percent from the period a year earlier, but they invested in 51 fewer companies, indicating they were funneling more money into fewer start-ups. [Claire Cain Miller, New York Times, Jun 19]
A Minnesota program that offers tax credits to angel investors has made its requirements more flexible ... gives qualified individuals a 25 percent tax break on their investments of $10,000 or more in Minnesota start-ups. ... doubling the company limit of previous private investment, letting LLCs qualify as angels, allowing lower salaries for interns [Wendy Lee. Minneapolis Star Tribune, Jun 2]
Several major venture-capital firms were vying to fund Uber, his fledgling company. While presenting his business plan at the offices of Benchmark Capital, Mr. Kalanick briefly excused himself to phone three other potential investors. His message: They needed to move fast. .... the latest gold rush to sweep Silicon Valley, where prospectors are now fighting over buzzy start-ups and companies are getting their pick of deep-pocketed backers. The momentum is driving a wave of deal envy and trash talking—complete with power plays, personal feuds and turf wars among Wall Street bankers, billionaire speculators and venture-capital veterans. [Monica Langley, Wall Street Journal, Apr 19] The rapid re-growth of capital for tech entrepreneurs undercuts the whining of the SBIR advocates for more SBIR to fill a capital valley-of-death hole. Since most of the SBIR goes for federal R&D with minor spillover into the private economy, even an increase in SBIR would do little economic good. Until the federal agencies change their self-serving approach, the money is taken from one federal pocket and routed through the program back into the same pocket.
Total investments by angel investors in 2010 were $20.1 billion, an increase of 14 percent over 2009, according to the 2010 Angel Market Analysis released by the Center for Venture Research at the University of New Hampshire. The category of health care services, medical devices, and equipment accounted for the largest share of investments, with 30 percent of total angel investments in 2010, followed by software with 16 percent and biotechnology with 15 percent, the center said. [Boston Globe, Apr 12]
Venture-capital firm Greylock Partners reopened its newest fund and raised its size to $1 billion in order to invest in fast-growing and late-stage technology companies, in another sign of how the venture industry is riding the latest Web frenzy. [Pui-Wing Tam, Wall Street Journal, Mar 2]
In all, 52 venture capital deals were struck in Connecticut in 2010, with more than $187 million invested, compared with 39 deals and $157.4 million invested in 2009. In the recent quarter, Helix Therapeutics (New Haven, CT; one SBIR) biopharmaceutical company, received $2.5 million; SeeClickFix (New Haven) firm that develops online and mobile platforms, received $1.3 million; and Affinimark Technologies (New Haven, CT; no SBIR) start-up that develops medical diagnostic products, received more than $1.2 million. A Guilford-based online advertising start-up, uKnow, received $453,000; Interactive Mobile @dvertising LLC in Norwalk received $275,000; Retail Optimization Inc., a New Haven firm that develops merchandising software, received $250,000; Twigtek Inc., a New Haven company that operates a website for selling or recycling used electronic equipment, also received $250,000. And Semantifi Inc., a Stamford software firm, received $50,000 from Connecticut Innovations Inc., the state's venture capital investing arm. [Janice Podsada, Hartford Courant, Jan 21, 11]
In all, 52 venture capital deals were struck in Connecticut in 2010, with more than $187 million invested, compared with 39 deals and $157.4 million invested in 2009. In the recent quarter, Helix Therapeutics (New Haven, CT; one SBIR) biopharmaceutical company, received $2.5 million; SeeClickFix (New Haven) firm that develops online and mobile platforms, received $1.3 million; and Affinimark Technologies (New Haven, CT; no SBIR) start-up that develops medical diagnostic products, received more than $1.2 million. A Guilford-based online advertising start-up, uKnow, received $453,000; Interactive Mobile @dvertising LLC in Norwalk received $275,000; Retail Optimization Inc., a New Haven firm that develops merchandising software, received $250,000; Twigtek Inc., a New Haven company that operates a website for selling or recycling used electronic equipment, also received $250,000. And Semantifi Inc., a Stamford software firm, received $50,000 from Connecticut Innovations Inc., the state's venture capital investing arm. [Janice Podsada, Hartford Courant, Jan 21, 11]
For only the second time in 20 years, high-potential Wisconsin companies last year lured more than $100 million of venture capital funding. ... The growing Wisconsin venture capital numbers are a tribute to all of the mentoring, entrepreneurship and business plan programs that have sprung up around the state, said Tim Keane, who runs Marquette's Kohler Center for Entrepreneurship and the Golden Angels investing network. [Kathleen Gallagher, Milwaukee Journal Sentinel, Jan 20]
VC Reality: While the VC industry has certainly suffered mightily, it is still not clear the worst is behind it. Starting in early 2008—and probably lasting through 2011—we will have witnessed an industry being cut more than in half. In 2008, VC’s raised nearly $28 billion; in 2010 the figure may only be $12 billion. There are nearly 500 VC firms listed as members of the National Venture Capital Association (where I am a board member); arguably less than 20% of those firms can predictably and reliably raise new funds in this environment. [Michael Greeley, xconomy.com/boston. Jan 3]
Today, although the IPO market is reviving, it remains a shadow of its former self. Instead, the main way for the owners of a start-up to cash out is to sell their firm to a bigger one, such as Cisco, Google, Facebook or even Groupon. These tech-savvy firms ought to be less gullible than the stockmarket investors of 1999. But their owners may now be so wealthy that they care less about value for money than the coolness of owning the Next Big Thing. [The Economist, Dec 18]
The [VCs]' cautious tone changes when it comes to certain investment sectors. They overwhelmingly expect dollars to increase for consumer Internet and cloud-computing software companies. Those sectors also happen to be the two that VCs labeled as most likely to see investment "froth," or over-funding. A majority expect investment to rise in health-care IT, mobile and software-as-a-service. They were less optimistic about more capital-intensive industries such as energy, medical devices, biopharmaceuticals and financial services. [Wall Street Journal, Dec 23]
IPO rebound. After two of the bleakest years for biotechnology companies going public, the sector has staged something of a revival in 2010. Fourteen small drug and medical device companies have launched initial stock offerings so far this year in the United States, a big jump over the four companies that went public in 2008 and 2009 combined. [Keith Darcé, signonsandiego.com, Dec 8]
Silicon Alley. $138M VC raised in 2010 by NYC tech companies - while Silicon Valley got $209M . ... 2.9 M sqft office space occupied by Google. ... incubators sprouting downtown, VC firms opening NYC offices, prominent angels spending more time with scores of developers [Jessi Hempel, Fortune, Dec 6, 10]
the total dollars invested in venture deals is just a fraction of what it was during the Web 1.0 frenzy — down, even, from 2008 levels. Meanwhile, a new breed of “superangels,” many of them entrepreneurs who made large fortunes at venture-backed companies, is impinging on traditional venture capital turf. ... The institutional investors that are the backbone of venture capital finance — pension funds, insurance companies and university endowments — have generally seen poor returns on these investments over the past decade. That means it’s hard for venture capitalists to raise money. [Jonathan Weber, New York Times, Dec 5]
in mid-November the Asian Venture Capital Journal (AVCJ) was forced, with regret, to turn away customers from its private-equity meeting. There was simply no room for the hordes of European and American investors stopping in Hong Kong on their way to China. too many firms are chasing too few deals. One executive at a leading American buy-out firm says that, more than any potential regulatory issue in China, he is concerned about the “intense amount of competition” from local firms, which outmanoeuvre Western firms on deals and also poach their staff. ... and the next round of successful conferences in Hong Kong may have less to do with tips on getting into China than with advice on getting out. [The Economist, Nov 27]
Go4Funding LLC, of Irving, Texas, aims to bring entrepreneurs and investors together by providing a platform for business owners to post their funding needs. Prospective investors such as angels and venture-capital firms can then browse through the opportunities to decide what to fund. [Wall Street Journal, Nov 15]
Wisconsin has the all of the assets needed to become a Midwest Silicon Valley except one: venture capital. The state has an abundance of research, entrepreneurs and angel investors with seed capital, said Toni Sikes, founder of the web-based business guild.com ... Wisconsin companies raise less than 1% of all venture capital invested in the U.S. ... Governor-elect Scott Walker, who said he is interested in pursuing the idea of a state-sanctioned venture capital fund to help attract investments from outside Wisconsin [Kathleen Gallagher, Milwaukee Journal Sentinel, Nov 11] States and entrepreneurs have face the ugly reality that serious venture capital seeks a community of friends where money and ideas have constant touch. In general that means a critical mass of world class universities, serious large company R&D, a tech dependent industry or two, and a clique of experienced VCs. Politically driven VC programs only sound good; real growth of the magnitude that Wisconsin and so many other states long for will only come from private VC in a reasonably friendly societal atmosphere for enterprise. Federal and state programs that hand money to tech companies are mostly deceiving themselves on what will come of it.
University of New Hampshire's Center for Venture Research show angels invested $8.5 billion in the first half of this year, a 6.5% decrease over the first half of last year. .... The number of active investors was 125,100 individuals, an 11% drop from last year's first half. [Wall Street Journal, Oct 28]
Silicon Valley venture capital firm Andreessen Horowitz has raised $650 million for a second fund. ... will use the money to make investments of $50,000 to $50 million in technology startups. [FM Russell, San Jose Mercury News, Nov 3]
New York's tech scene is getting a flood of venture capital for Internet deals, rivaling San Francisco. ... "New York doesn't participate in capital-intensive business. There's no biotech or hardware here. But if you look at New York's place in the software business, New York is a huge player." [Ryan Kim. businessweek.com, Oct 28]
Venture capitalist investments in start-up and growth companies continued to decline sharply in the third quarter of 2010, both in New England and nationally, as the economy struggles to rebound from the recession. Nationally, venture capitalists invested $4.8 billion in 780 deals in the third quarter of 2010, a 31 percent decrease in dollars invested and a 19 percent decline in number of deals from the previous quarter, according to the MoneyTree Report released yesterday by PricewaterhouseCoopers and the National Venture Capital Association. [Boston Globe, Oct 15]
Southern California’s Tech Coast Angels (TCA) says today it is forming a new fund that will allow non-members [(who qualify as high net-worth investors) and institutional investors] to collectively participate in startup investments [Bruce Bigelow, signonsandiego, Aug 29, 10]
a growing breed of start-up investors dubbed "super angels" is rapidly raising new money—and ratcheting up competition with established venture capitalists .... What elevates super angels into an unofficial upper class generally is the magnetic effect their participation in a deal has on other investors—a main reason entrepreneurs like to do business with them. [Pui-Wing Tam and Spencer Ante, Wall Street Journal, Aug 16] The SBIR advocates should see such entrepreneuring as a threat to the market failure idea that underlies the pretending that government agencies can and will do what the capital markets won't do - invest in nurturing new technologies with a future. The angels will undoubtedly fill the demand for small early investments that VCs haven't got time to deal with. SBIR could do that also if the big mission agencies weren't committed to self-service.
Southern California’s Tech Coast Angels (TCA) says today it is forming a new fund that will allow non-members to collectively participate in startup investments, a move that should add some firepower to TCA deals and could smooth out the funding process for entrepreneurs. [Bruce Bigelow, signonsandiego.com, Aug 3, 10
Number of the day 53% That's how much U.S. venture-capital investments jumped in the second quarter from a year earlier. [Bloomberg briefing, Jul 17]
VC investing in Austin companies rose 64 percent during the second quarter compared with the same quarter a year ago, ... Austin software companies received the most investment dollars [Austin American Statesman, Jul 16] Triangle companies that rely on venture capital feasted on more than $112.2 million in new funding in the second quarter, [Raleigh News &m Observer, Jul 16]
[Illinois has] a new tax credit to encourage angel investment and extending the state's R&D tax credit one more year. The Innovation Development and Economy Act (Senate Bill 2093) allows eligible angel and early-stage institutional investors to take a 25 percent tax credit on investments in small, technology firms. [SSTI, Jun 30. 09]
General Motors Co. has set up its own venture capital company with $100 million to invest in companies that are developing auto-related technology. ... The subsidiary probably will make small investments at first in startup companies [San Francisco Chronicle, Jun 4]
Venture Mechanics in Seattle. It’s basically an outfit of four experienced startup executives who are trying to reinvent the process of launching tech companies. ... more like a “sandbox for serial entrepreneurs,” according to the website. ... Invest in cash flow-generating businesses, and use the profits to start new businesses [Gregory Huang, xconomy.com/seattle, May 27]
Silicon Alley. Mayor Michael Bloomberg has a message for computer geeks everywhere: Forget sunny Silicon Valley and launch your company here. Bloomberg made his pitch Tuesday at a gathering of technology entrepreneurs, announcing the creation of a city-sponsored $22 million venture fund that will invest in promising tech companies headquartered in New York. [Beth Fouhy, AP, Mar 25]
More Outsourcing. Eli Lilly and other U.S. partners joined the Australian government of Queensland to create a venture capital fund [up to $250 million] to encourage development of the biotechnology industry. [Indianapolis Star, May 21]
many venture capitalists have grown cautious about putting money into what Vinod Khosla, the prominent Silicon Valley green tech investor, calls “science experiments.” But Quercus Trust is still taking chances on blue-sky start-ups pursuing technological breakthroughs. .. invested $500 million in clean-tech companies since 2002 ... Recipients of his philanthropy, for instance, signed confidentiality agreements that forbade mention of his name, and this is the first time that he’s granted an interview in person to the news media. [Todd Woody, New York Times, May 9]
Eight companies hope to raise up to $1.9 billion through initial public offerings by Friday, potentially the biggest week for IPOs so far this year. .... Forty companies have raised $6 billion in IPOs this year, according to Renaissance Capital. [AP, May 4]
HOW can you spot the venture capitalists at a business conference? They’re the people who are always hunting for the exits. [The Economist, Apr 29]
A group of local chief executives and venture capitalists announced they have launched "12x12," an initiative that seeks to create 12 new companies in Massachusetts over the next 12 months. Plans call for the creation of teams made up of one chief executive, one venture capitalist, and one "next generation" entrepreneur to launch a new company, 12x12 said. More information about the participants and 12x12 can be found in the group's press release and in a Boston.com post on Scott Kirsner's Innovation Economy blog. [Boston Globe, Apr 30, 10]
he CIA announced a five-year strategic plan that would invest heavily in new technologies to combat nontraditional threats such as cyber attacks from overseas and gain better intelligence on rogue states. ... Officials said the agency would boost the technology budget by tens of millions of dollars. [Siobhan Gorman, Wall Street Journal, Apr 27] No, CIA has no SBIR, but it does have a VC - In-Q-Tel.
some observers fear a new bubble is already inflating in the venture capital industry. Companies with the word "social" in their mission statement - better still "social" and "mobile" - have sparked a frenzy among early-stage investors. [James Temple, San Francisco Chronicle, Apr 24]
Mr. Dodd's rules for angels would require that start-ups seeking angel investments file with the Securities and Exchange Commission and endure a 120-day review. Rare is the new company that doesn't need immediate access to the capital it raises, and a four-month delay is the kind of rule popular in banana republics that create few new businesses. .... also raises the net worth and income thresholds to $2.3 million and $450,000, respectively. The Angel Capital Association, a trade group, estimates that these provisions would disqualify about 77% of current accredited investors [Wall Street Journal, Apr 22, 10]
the latest angel investment network in the Northwest, ... Wings, the new angel network for medical device investors, which got started at its inaugural meeting yesterday, in which it reviewed business plans of three startups. [Luke Timmerman, Seattle Times, Apr 15, 10]
LaunchBox Digital, one of a new breed of business accelerators that help technology startups survive and thrive, is expanding to the Triangle. Founded in 2008, Washington-based LaunchBox provides startups with up to $20,000 in seed capital, free or heavily discounted professional services such as legal advice and accounting, and a 12-week program in which entrepreneurs work daily with a team of mentors and advisers. In exchange, LaunchBox receives a 6 percent ownership stake in the business and warrants that allow it to make an additional investment. [David Ranii, Raleigh News & Observer, Apr 15]
[Virgina enacted] a measure to exempt the capital gains tax on investments in science-based or biotech startups, designed to provide a significant incentive for investors in technology start-ups. But since Republicans believe in low tax rates anyway, it won't make much difference to angels and VCs except in the minds of the political strategists. The Minnesota legislature has passed a 25 percent tax credit for individuals and pooled funds that invest in early-stage, high-tech businesses [SSTI, Mar 31]
Total investment by angel investors in 2009 was $17.6 billion, down 8.3 percent from 2008, according to the 2009 Angel Market Analysis released by the Center for Venture Research at the University of New Hampshire, which has been studying the angel market for three decades. [Boston Globe, Mar 31]
Starting a new business is easier than it was a year ago, but wealthy investors, venture-capital firms and banks are still trickling out money very selectively. ... Start-up money is rarely easy to come by, but as investors heal from the financial crisis, they're even more likely to be skittish about putting money into new companies with untested ideas. ... Banks say that credit for start-ups remains tighter than usual. [Conor Dougherty and Pui-Wing Tam, Wall Street Journal, Apr 1] Got a great tech idea but no idea how to sell it? Try SBIR where most of the funders don't care about your future, just owning your technology for their purposes.
‘How big of a bong is he smoking?’ Seeks $5 Billion (With a “B”) from Feds to Support VCs ... “Tom’s approach [is] to have the federal government fund VCs,” Roth wrote in an e-mail in response to my query. “I proposed that the private sector fund early stage (pre VC) and that the federal government would match at the same terms and conditions as the private sector.” [Bruce Bigelow, San Diego Union Tribune, Mar 22]Isn't a fair-share for VCs as compelling as a fair-share for SBIR companies whom VCs wouldn't touch? If economic gain from innovation is the objective, why not help the most likely to get there? Not to worry; no VC worth the money wants to tangle with government as a partner.
Where's the VC? A decade ago, venture capitalists seemed like genuine alchemists, able to turn even startup dross into purest gold. In recent years, however, the industry has seemed less magical than mundane. Since 2004, its average five-year return has oscillated around zero. ... As Fred Wilson, a principal at Union Square Ventures, bluntly puts it, "Venture capital funds, as a whole, basically made no money the entire decade." ... the costs of starting companies and of making companies profitable in sectors like information technology have fallen dramatically thanks to open-source software, the globalization of engineering, the commodification of bandwidth and infrastructure, and other factors. Wilson, for instance, estimates that costs have fallen "at least an order of magnitude" in the past decade ... The real problem is not complex: there's too much venture capital, and there are too many venture capitalists, for the industry to be really profitable. The industry as a whole now has about $200 billion under management, more than twice what it did in 1998 [James Surowiecki reviewing Lerner's Broken Dreams, MIT Tech Review, Mar/Apr 10]
The technology bubble popped a decade ago, but the venture-capital industry that helped finance the boom stayed largely intact. Now venture-capital firms are going through their own brutal culling. .. says Rebecca Lynn, a principal at venture-capital firm Morgenthaler Ventures in Menlo Park, Calif. "We'll see a continued shakeout as a lot of firms that aren't the top firms won't be around." ... Meanwhile, Austin Ventures has de-emphasized its investments in young companies and is instead focused on larger private-equity deals that take $15 million to $25 million of capital, says Mr. Siegel. [Pui-Wing Tam, Wall Street Journal, Mar 9] Remember that VCs want big ROI, not attaboys or votes for helping mediocre companies.
After spending last year in the doldrums, venture capitalists are optimistic that a rebound will occur this year, particularly in the so-called green-tech energy and conservation sector, according to a recent survey from the tax and advisory firm KPMG LLP. [Boston Globe, Mar 5]
The board of the Massachusetts Life Sciences Center today approved spending $5.5 million to launch the second year of its flagship investment program, which provides "accelerator" loans to early-stage biotechnology and medical device companies. Applications to the program are due by March 24, and loans of up to $750,000 per company will be available [Robert Weisman, Boston Globe, Feb 25]
Intel and 24 venture capital firms said Tuesday that they planned to invest $3.5 billion in American start-ups over the next two years. ... hiring 10,500 graduates of American colleges, largely those with computer science and engineering degrees ... Fewer than 10 percent of college graduates in the United States have engineering degrees, compared with more than one-third in India and China, and more foreign-born graduates of United States universities are returning to their home countries, he said. ... others say that the competitive threat from abroad is overblown. The United States benefits no matter where new technologies are invented, because Americans are more innovative at using and commercializing technologies, said Amar Bhidé, a visiting professor at the Kennedy School of Government at Harvard [Claire Cain Miller, New York Times, Feb 24]
Venture capital investment in cleantech businesses fell by half in 2009, according to an Ernst & Young LLP report. [San Francisco Business Times, Feb 8, 10]
We asked a handful of VC investors to name the companies they hadn’t invested in but wish they had. ... Bessemer Venture Partners declined Apple, FedEx, and Google ... other VCs listed Agios Pharmaceuticals, EnerNOC, LogMeIn, [Galen Moore, Mass High Tech, Feb 3]
A venture capitalist recently remarked to me that the uncertainty the administration has created is "nothing short of paralyzing." Nobody will invest in an industry that might be the next to be overtaxed, overregulated, or publicly disemboweled. [Kimberly Strassel, Wall Street Journal, Jan 29] Strassel writes regularly in the ultra-conservative and growing WSJ op-ed section that never saw a good business tax or regulation.
several new start-up "incubators" are slated to pop up around Silicon Valley in the next few months. ... Well-known incubators include Y Combinator and Plug and Play Tech Center, with many venture-capital firms also incubating start-ups. [Pui-Wing Tam, Wall Street Journal, Jan 28]
[VCs] last year invested the lowest amount in such companies since 1997, according to a report from Pricewaterhouse Coopers and the [NVCA] said Jeff Fagnan, a partner at the investment firm Atlas Venture. “It would be healthier if we can return to the pace and kind of deals that were done in the 1990s.” That includes backing more first-time entrepreneurs and ideas coming out of universities, he said. [Claire Cain Miller, New York Times, Jan 22]
Many venture capitalists say they plan to invest more cash into Silicon Valley companies this year than in 2009. But certain categories of technology start-ups won't be the recipients. In particular, companies in areas such as networking equipment, telecommunications, semiconductors and alternative fuels may be fresh out of luck, venture capitalists said. That is largely because those areas typically require large sums to get off the ground. ... "We're preoccupied by capital efficiency," said Bob Ackerman, a venture capitalist [Pui-Wing Tam, Wall Street Journal, Jan 21]
Feed gazelles The biotech industry raised a record $55.8 billion in 2009 despite hesitant stock and venture capital markets, as drug-company partnerships fed the cash-burning startups that develop new therapies. .. a jump of 85% over 2008, according to Steve Burrill, whose San Francisco firm Burrill & Co. is both an industry investor and analyst. ... $37 billion in financial partnerships through which large drug companies license technologies or experimental remedies from biotech startups, ... [CEO] of Sangamo BioSciences said he hopes to use partnerships to fund the costly marathon of developing a biomedical breakthrough while retaining enough control to preserve his company's big league potential. [Tom Abate, San Francisco Chronicle, Jan 10, 10] The SBIR advocates want to choke this flow by refusing SBIR funds to companies that have larger VCs investing at the nursery stage to mature the infant technology to the stage where big pharma would be willing to take over. But if SBIR is to be a launch platform for future market companies, it has to get beyond bland and repetitive handouts to life-style firms doing incremental R&D for government agencies. Feed gazelles, not SBIR mills. Both the agencies and the economy will be better off in the long run.
Army's venture venture. The Army's VC (OnPoint Tech) current investment portfolio : A123 Systems (Boston, MA; $750K SBIR, IPO 2009) advanced Lithium-Ion based cells for rechargeable battery packs; Atraverda (UK) advanced bi-polar battery electrodes for rechargeable batteries; Integrated Fuel Cell Technologies (Burlington MA; no SBIR) next generation fuel cell systems for portable devices; Nanosolar (Palo Alto, CA; $1.7M SBIR) thin-film solar technology for roll-to-roll printing of solar cells on flexible substrates, PowerGenix (San Diego, CA; no SBIR) next-generation rechargeable batteries; Power Precise (Herndon, VA; no SBIR) a fabless semiconductor company specializing in battery management devices; Ultra Cell (Livermore, CA; no SBIR) integrated fuel cell systems; Zinc Matrix Power (Santa Barbara, CA; no SBIR) high-performance rechargeable alkaline battery technology for commercial and military markets; Akermin (St Louis, MO; no SBIR) portable fuel cells based on its proprietary “Stabilized Enzyme Biofuel Cell” SEBC™ technology; Superprotonic (Pasadena CA; $200K SBIR) solid acid fuel cell. [defense-ventures.com] No surprise that a VC, even one doing it for the government, sees tech opportunity much different than does Army SBIR. I note that the three outside trustees (of five trustees) of OnPoint are a DOD political appointee, and entrepreneur/attorney, and Paul Gompers from Harvard Business School who with Josh Lerner publish a lot of venture research. Lerner did a lot of SBIR study until, I presume, he gave up on SBIR's ever being anything but a political handout.
Not my Department Many of those Asian companies have moved well beyond manufacturing to seize greater control over the look and feel of tomorrow’s personal computers, smartphones and even Web sites. The investment arms of large Taiwanese and Chinese manufacturers have created an investment network in Silicon Valley operating under the radar that pumps money into a variety of chip, software and services companies to gain the latest technology. As a result, some Asian manufacturers have proved more willing than entrenched Silicon Valley venture capitalists to back some risky endeavors. [Ashlee Vance, New York Times, Jan 6] What is DOD's SBIR likely to do in response to along term threat to national autonomy in high tech innovation? "That's not my department."
Not many Silicon Valley companies have gone public in recent years. And as 2009 draws to a close, the past 12 months have followed the same lackluster pattern. Through early this week, eight venture-capital-backed companies had gone public in 2009, according to research firm VentureSource. [Pui-Wing Tam, Wall Street Journal, Dec 31]
There’s a clear cultural difference between Boston and the Valley, Clerico told me over coffee: “It’s accepted as normal to have started a company - you feel like a normal member of society. People ask you things like what your pre-money valuation was. Here, I think they wonder if you’re involved in some kind of pyramid scheme.’’ “All of my friends in California are start-up founders, and here [in Boston] my friends are investment bankers, accountants, and lawyers,’’ said Aberman, who chose the entrepreneurial path over law school. Both of them were raised on the East Coast. [Scott Kirsner, Boston Globe innovation blog, Dec 28]
After a dismal 2009, venture capitalists are preparing to ramp up their investments, injecting much-needed cash into start-ups. ... many venture capitalists say they have been meeting investment bankers and working with their tech start-ups on filing for initial public offerings next year. [Pui-Wing Tam, Wall Street Journal, Dec 23] Think your SBIR company could use some venture capital? How will the VC get his money out with an obscene profit since he isn't going to be a long term investor? That is, how will your firm go from a $5M valuation to $25M?
Nearly $160 million in venture capital money flowed into San Diego County in the third quarter to help launch 78 new tech-related startups, according to a report released this week by Connect, a nonprofit helping the growth of technology and life-science firms in the local market. [Dean Calbreath, San Diego Union Tribune, Dec 18, 09]
Indiana-bred life sciences startups hoping to commercialize new products will be able to seek help from a second venture capital fund organized by BioCrossroads ... $58 million for the INext Fund, a successor to the $73 million Indiana Future Fund that was formed six years ago and helped 14 Indiana startups. [Tom Spalding, Indianapolis Star, Dec 17]
With hungry bioscience entrepreneurs on every block, entrepreneurs say VC due diligence is riding the brake on life sciences investments. Entrepreneurs who have had success getting funded in the past have noticed the change, and some say it may be a permanent shift in the life sciences sector. Investors, they say, have begun to realize just how risky life sciences investments truly are. ... Taken as a whole, the biotech industry is a net loser over its lifetime, Anders said. There have been wild success stories, but far more failures, said Richard Anders, a serial entrepreneur who this spring helped found Mass Medical Angels, a life sciences investor group. [Galen Moore, Mass High Tech, Dec 16, 09] Management guru Peter Drucker used to remind the computer industry that that industry never made a profit either. One of the barriers is that the dot.com and financial derivatives bubble collapses have decimated the ranks of willing VCs who see no IPO exits.
No Trap Door, but. Her opening PowerPoint slide splashed on to the large screen at the front of the charmless hotel function room. She paused for just a few seconds as an official placed a small digital alarm clock on the podium. Now she could begin. She had exactly seven minutes before the clock would start beeping, loudly and annoyingly. .... 66 entrepreneurs giving presentations earlier this month at the New England Venture Summit [Boston Globe, Dec 15]
Indiana University unveiled a new $10 million venture capital fund aimed at investing in the development of innovations and technologies created at the university. [IU press release Dec 4]
Venture capitalists and chief executives of venture-backed companies ... generally agree on the strategic objectives for the companies they are building, according to a new study that offers a revealing look inside the boardroom. The "A Seat at the Table Study," a follow-up to the 2006 survey conducted by the National Venture Capital Association and Dow Jones VentureSource, also shows that VCs and CEOs are spending more time these days in the boardroom as they weigh heavy issues in the face of a punishing economy. [Scott Austin, Wall Street Journal, Nov 25] One of the oft-heard arguments for SBIR is sheltering small companies from control and equity by VCs. These companies want the fruits of capitalism without paying capital's price and the usual result is unhealthy dependence on an uncaring government. The lists of SBIR winners teem with market-dead companies that only pretend that they are interested in commercialization. And until the government (executive and legislative) change SBIR's objective and structure, the parade of zombies will continue.
Intel Capital announced seven new investments totaling about $25 million. [Silicon Valley/San Jose Business Journal, Nov 17] Two of the seven are American companies.
Since institutional investors are under pressure to show short-term returns, VC funds are trying to keep them as investors by going for maximum liquidity, creating early payoffs via premature "exits" (selling some startups in their portfolios within three years, say). Instead of working to make their best startups strong and independent, they're "flipping" them [Business Week.com, Nov 19] And ... Venture-capital funds are cutting fees as they scrounge for cash amid a bruising fund-raising environment. [Wall Street Journal, Nov 23] No worry for SBIR since VCs seem interested only in the stuff funded by NIH which has only a piddle of SBIR money.
The future of the venture capital industry? With ten-year returns tumbling toward negative numbers, lots of people rightly wonder where the venture business goes from here. [Paul Kedrosky, growthology blog, Oct 28]
as many as six companies will try to go public in the U.S. this week. [Wall Street Journal, Nov 16] Any of them "SBIR-involved"? You gotta be kidding; the big money SBIR agencies have no incentive to favor companies and ideas with potential for public capital. And with Congress too distracted by important issues, no SBIR "improvement " is going to happen. The myth that SBIR does something wonderful for small business will continue despite the lack of any compelling evidence.
A crop of potentially groundbreaking companies is emerging from the wreckage of the Great Recession. ... the downturn has done little to dampen the entrepreneurial spirit. During the first half of this year, angel investors financed 24,500 new ventures, 6% more than during the same period last year, according to the Center for Venture Research. ... this year will see the birth of roughly 50,000 companies with enough promise that someone is betting money on them. [Spencer Anta, Business Week, Nov 12]
The Chinese government announced the launch of 20 venture capital funds (initial capitalization $1.31 billion), designed to target investments in high-tech sectors within their national economy. [SSTI, Nov 5] Look at the bright side: maybe that government investment scheme will do as poorly as SBIR in fostering innovation with economic impact.
Talent Above All. It can be argued that among talent, cash and technology, no factor is more critical to a start up than talent. The talent drives innovation, attracts the venture capital and makes the critical life or death choices of the company. No matter how groundbreaking the technology or the amount of money invested, it is the people steering the ship that can sail off into the sunset or crash into rocks. [Anthony Rodriguez, Seattle Times, Nov 4] VCs usually say the same thing. I once SBIR-funded a company on the basis that the technical genius hire an experienced business CEO and that a regional VC participate in funding the company's operations (although not necessarily the R&D). After the contract started, the technical genius destroyed the deal and the company failed.
Can Angel Investors Earn Heavenly Returns? one recent study found that 7% of the angel investments with final outcomes went up at least tenfold. ... But roughly half of all new businesses fail within their first five years, according to the Small Business Administration. Not surprisingly then, researchers have estimated that at least half of all angel investments lose money and 48% of investments with final outcomes result in a 100% loss. ... The vast majority of the profits from angel investing appear to be earned by the top 10% of angels, who tend to be rich, well-connected veterans of high-growth industries. ... So why would anyone want to be an angel, and who should consider it? "You get to play God a little," said Paul Kedrosky, an active angel investor [Jason Zweig, Wall Street Journal, Oct 31] Venture capital investing edged up nationally last quarter for the first time in 18 months, suggesting the funding decline for technology and life sciences start-ups may have bottomed out, according to the quarterly MoneyTree venture report released yesterday. [Boston Globe, Oct 20] but not so good in NC The flow of new venture capital to Triangle companies slowed to a trickle in the third quarter, with just four businesses raising a paltry $27.7 million, according to a new survey. [Raleigh News & Observer, Oct 20] and in MN Total quarterly venture-capital investments totaled only $26.4 million, Minnesota's worst showing since 1995. [Minneapolis Star Tribune, Oct 20]
The 16th floor at Two Galleria Tower [Dallas TX] and similar outposts once were touted as the new Silicon Valleys, where clusters of venture-capital firms sprouted to fund the latest technology start-ups. Now, amid a tough fund-raising climate and poor venture returns, the 16th floor and others like it across the nation have gone quiet. Instead, the venture-capital industry is consolidating in its centers of Silicon Valley in Northern California and Boston as the recession pushes regional players out of the market. ... Dallas venture firms, in particular, invested in local start-ups that specialized largely in telecommunications and networking, many of which have flopped amid a weak telecom sector and a slow initial-public-offering market. [Pui-Wing Tam, Wall Street Journal, Oct 12] The bi-costal concentration of venture capital bodes ill for state and regional efforts to grow new technology industries with state subsidies. And it puts SBIR in a bind if it tries to spread the money around and have an economic impact. The less VC money in the area, the less the chance that any government funded company will ever sprout into a substantial economic success.
On-Line Assets. Angelsoft.net, from New York's Angelsoft LLC, offers an online venue where entrepreneurs and investors can meet and get to know each other. ... TheFunded.com online community of entrepreneurs offers reviews of more than 5,000 venture-capital investors, rating them on such criteria as track record and deal terms. The site's more than 12,000 members can also share the documents that spell out their venture deals and discuss how to find investors and run a business. ... Startable.com For a peek into how venture capitalists work, and how company founders can navigate their world, check out this blog by former venture-capital associate Healy Jones and serial entrepreneur Prasad Thammineni. [Wall Street Journal Web Watch, Sep 28]
Companies backed by venture capital grew their revenue and employment numbers at a much higher rate than other businesses in recent years, according to a report from the National Venture Capital Association. Between 2006 and 2008, revenue at U.S. venture-backed companies increased by 5.3 percent, while total U.S. business revenues grew by only 3.5 percent. Employment at venture-backed companies grew by 1.6 percent during that same period, compared to 0.2 percent in the overall U.S. private sector. Last year, venture-backed companies accounted for 11 percent of U.S. employment and 21 percent of U.S. gross domestic product (GDP). [SSTI, Sep 23]
But not everyone buys NVCA's story: The [NVCA] report says in 2008, VC-backed companies generated about $3 trillion in revenue and employed about 12 million people in the United States. The report also says VC backed companies have out-performed non-VC-backed companies, and that VCs create whole industries more or less out of thin air. That all sounds good, but Vivek Wadhwa, a researcher at Harvard, Duke and UC-Berkeley calls B.S. at TechCrunch, saying the NVCA is trying to justify tax breaks and bailout dough for VCs: How’d they come up with these numbers? They added up all the revenue generated in 2008 by any company a venture capitalist ever invested a dime in. So if John Doerr bought Bill a lunch in 1985, they’d count Microsoft as part of their empire. Maybe I’m exaggerating a bit. But seriously, the NVCA numbers aren’t even remotely credible. [Mass High Tech blog, Sep 21] Maybe SBIR would sound a lot better if its advocates hired NVCA to write their success story.
Pepperdine University finance professor John Paglia, director of the new Pepperdine Private Capital Markets Study, said he was startled by one finding in its recent survey of financiers. What do you think matters more to a venture capitalist pondering an investment? A financial metric such as a discounted cash-flow analysis? Or a "gut feeling"? "Gut feelings" were cited by 67 percent of 185 venture capitalists surveyed, while the cash-flow analysis was cited by 43 percent, according to the study scheduled for release today. (Some said they relied on both.) [Scott Duke Harris, San Jose Mercury News, Sep 24] One of the barriers to innovation in SBIR is the federal agency demand for predictable results by predictable companies. The procurement procedures don't allow gut feelings and smell tests to find the best chances for breakthroughs with a future.
Even a successful investor in the life sciences industry sees danger now. Domain Associates, a company based in Princeton, N.J., and San Diego, raised $500 million for a new venture fund in August. It is the eighth such fund Domain has started in 24 years, and in that time, it has backed more than 200 life sciences companies. But few other venture funds were able to raise money, said James C. Blair, a Domain partner. The people investing “in our area are hurting, and this will have long-term implications for venture capital in general,” he said. [James Flanigan, New York Times, Sep 16]
Khosla Ventures is announcing on Tuesday that it has raised $1.1 billion in two funds that will invest in green technology and information technology start-ups. [Clare Cain Miller, New York Times, Sep 1] Let's guess that Khosla will do a lot more good with his billion than the government will ever do with SBIR in green technology as it funds stuff that makes the government smarter and stuff that has no economic future (which the government isn't much good at estimating anyway).
FundingPost.com, a network of venture and angel investors, holds meetings between entrepreneurs and investors, charging for the get-togethers and for prepping entrepreneurs in the art of presenting their stories to venture and angel groups. [James Flanigan, New York Times, Aug 20]
Nearly a quarter of the [VC] firms’ capital is in software, followed by medical devices, biotechnology, clean technology and the Internet. [Phyllis Korkki, NY Times, Aug 15]
The bump in earlier-stage [VC] investment represents a renewed interest in young companies by investors. In the second quarter, seed- and early-stage investments represented 41 percent of venture dollars, the highest percentage since the late 1990s. This increase, however, was driven by several large deals as well, including the largest deal of the quarter. The number of seed- and early-stage deals remained flat. [NVCA, Jul 30]
Venture capitalists cut their U.S. investments in half during the spring, the second-consecutive quarter to mark a more than 50 percent decline, leaving the money flowing to startups at the slowest trickle in 12 years. [AP, Jul 21]
[Mike] Maples — who built his career in Austin as head of product marketing for Tivoli Systems in the mid-1990s and then as a co-founder and executive of Motive Inc. from 1997 to 2004 — has been an active investor in Austin startups. As head of Maples Investments, based in Menlo Park, Calif., he has put money into six Austin companies, including network management software maker SolarWinds Inc., which had an initial public offering in May; Bazaarvoice Inc., which sells software that lets retailers add ratings and reviews to their Web sites; and Spiceworks, which offers free network-management software that's supported by advertising. [Lori Hawkins, Austin American Statesman, Jul 20]
We Love Capitalism, Except. Three metropolitan areas dominate the U.S. venture capital landscape: San Francisco, Boston and New York. ... home to about half of all U.S. venture firms and about half of all U.S. venture-backed companies. ... Authors Henry Chen, Paul Gompers, Anna Kovner and Josh Lerner [find] Venture firms favor regions with a proven track record of success over underserved regions where there might be untapped opportunities. ... a greater number of opportunities, pools of talented employees and benefit from knowledge spillovers. The authors suggest that this concentration may be a rational allocation of resources and make sense for investors. [SSTI, Jul 14] While concentration makes sense for investors, it doesn't make sense for politicians whose main issue is distribution. A representative from Kansas will not enthusiastically support money for "national competition" if Kansas isn't getting a "fair share" of the pie. The Kansas politician gets no votes from Silicon Valley which may not even be able to locate Kansas on an unmarked map. Representative democracy has consequences.
Confronting the roughest recession in generations, the nation's venture capital industry raised only $1.7 billion in the second quarter of 2009 — a cliff-like plummet from the $4.6 billion raised during the previous quarter, according to an industry report [Scott Harris, San Jose Mercury News, Jul 14]
the Entrepreneur Pitch Workbook, essentially a “Dummies” guide to pitching venture capitalists. Among the book’s suggestions: Practice so that a pitch will last one hour, including time for questions; prepare a 12- to 20-page slide presentation and bring hard copies; arrive 10 minutes early to set up; and dress business casual, unless you’re more comfortable in a suit. .. the presentation should be coherent and focused. Don’t dance around questions, especially if they are asked multiple times in different ways [Ty Mahan, DJ News Wire, Jul 13]
"Washington has become a new bank." Venture capitalists like Mr. Scholl, who put money into young companies and help nurture them with the aim of profiting later when the firms go public or are sold, are turning to Washington to boost the prospects for their investments .... a change for the venture industry, which has traditionally prided itself on keeping the government at arm's length ... new investment without diluting the equity held by investors like her firm. [Pui-Wing Tam, Wall Street Journal, Jul 6]
Marc Andreessen, co-founder of Internet pioneer Netscape Communications, and business partner Ben Horowitz. The two Silicon Valley entrepreneurs just raised $300 million to launch the [new VC] firm, ... adopting a "super angel" strategy in which a modest-size venture firm invests morsels of money into many startups. ... They'll invest in 70 or 80 companies with minimal involvement in most, and then double or triple down on the dozen or so winners that emerge. [Spencer Ante, Business Week, July 13]
Venture capital investment in green technologies totaled $1.2 billion in 85 deals in the second quarter of 2009, up from $836 million in 59 deals in the first quarter, Greentech Media Inc. said. [Boston Globe, Jul 2]
Massachusetts has seen a spate of recent medical device funding rounds, even as capital remains tight. Analysts say a combination of pent-up demand and wariness about investments in biotechnology has helped fuel a string of venture capital rounds for medical device companies. [Mass High Tech, Jun 26]
Venture capitalists and other investors will arrive at the governor's mansion Monday morning to nibble on pastries, sample appetizers and hear a pitch that they should put some of their money into Wisconsin companies. ... State officials have named it a "Call to Action," ... The problem the state is trying to address is the "huge disconnect" between the amount of research taking place in Wisconsin and the amount of risk capital coming into the state [Kathleen Gallagher, Milwaukee Journal Sentinel, Jun 6] Both Wisconsin governors and SBIR companies have to realize that VC goes where outsize profits are in prospect, not where there are merely a lot of smart people and technical reports.
Fewer VCs. Since the end of 2007, the number of venture-capital principals, who make investment decisions and are directors of start-up companies, has tumbled by more than 15%, according to the National Venture Capital Association. ... For most of the past decade, venture-capital firms took in mountains of cash from investors, spawning a frenzy of start-ups from online advertising to clean technology. Too few of those investments have led to big paydays during the past few years, hurt by the falloff in initial public offerings and acquisition volume. [Pui-Wing Tam, Wall Street Journal, Jun 5]
But in the last several weeks, the venture capitalists have returned, enticed by Balihoo’s strong sales, and also by something infinitely more valuable: glimmers of renewed faith in parts of American commerce. “Risk” no longer seems like a radioactive word. [Peter Goodman, New York Times, May 10]
A measure offering a tax credit for "angel" investors in startup technology companies has passed the Colorado House of Representatives. ... The credit would be for 15 percent of the amount invested for each of two years after the investment is made, to a maximum credit of $100,000. [Denver Business Journal, Apr 16] Using the tax code for social purposes while complaining of taxes being too complicated.
The lifeblood of start-ups is drying up. Venture capital funding fell off a cliff in the first quarter, according to the latest MoneyTree venture capital survey, which is scheduled to be released today. [Boston Globe, Apr 18] Venture capital investing in Austin plummeted to the lowest level in 11 years during the first quarter, and the national picture was just as bleak. [Austin American-Statesman, Apr 20]
Only 40 venture capital funds nationwide raised money during the first three months of the year, marking the lowest level of institutional funding in six years. [Kim Hart, Washington Post, Apr 14]
A new regional angel fund has been launched called Mass Medical Angels, devoted exclusively to backing life sciences startups. .... according to its one-page website, plans to fund early stage biotechs that want to raise from $250,000 to $3 million. [Mass High Tech, Apr 3, 09]
according to a recent national survey, angel investors, who provide money and guidance to young companies in return for an ownership stake, are scaling back, too. And their activity is expected to slow further. The University of New Hampshire's Center for Venture Research survey reports that total angel investments fell by 26 percent from 2007 to 2008, to $19.2 billion. The total number of angel deals fell only 2.9 percent, to 55,480. [Lori Hawkims, Austin American-Statesman, Apr 6]
Venture capital investment in green technologies totaled $836.1 million in 59 deals in the first quarter of 2009, numbers that are roughly back to 2007 levels, Greentech Media Inc. said. [Boston Globe, Apr 2]
The global market for initial public offerings of stock set a record in the first quarter -->... The 46 deals raised a total of $1.3 billion, also a new quarterly low since Dealogic began tracking IPOs in 1995. That compares with 221 IPOs world-wide in the first quarter of 2008, when $32.6 billion was raised. [Wall Street Journal, Apr 1]
Google announced more details about its highly anticipated venture-capital fund, in which it plans to commit roughly $100 million over the next year. ... Google has a history of investments, both through its business-development department and Google.org, its nonprofit division. [Jessica Vascellaro, Wall Street Journal, Mar 31]
Angel investments in the United States last year totaled $19.2 billion, a drop of 26.2 percent from 2007, but the number of deals was relatively unchanged, a new study by the University of New Hampshire concluded. [Boston Globe, Mar 31]
Spark Capital, a Boston venture capital firm, has officially launched Start@Spark, a seed funding program designed to stimulate innovation and entrepreneurship. Entrepreneurs with proposals aligned with Spark Capital’s "media and technology conflux strategy" will be granted up to $250,000 to quickly accelerate company progress and prepare for an initial formal round of venture funding, the firm said in a press release. [Boston Globe, Mar 25, 09]
The market for initial public offerings of common stocks, or IPOs, is "a frozen tundra," said Bob Power, a vice president at NYSE Euronext who is responsible for new exchange listing in regions of the East and Midwest. Last year, 40 companies went public on the various U.S. exchanges, the lowest number since 1979 and a decline from 350 companies in 2007. "The last two quarters, the IPO market essentially shut down," Power said. [David Ranii, Raleigh News & Observer, Mar 5]
The developer of an ambitious biosciences park north of Rochester MN is close to a deal with a major investor in California to create a $1 billion venture capital fund to lure biotechnology start-ups to the state, sources say [Minneapolis Star Tribune, Feb 24]
Initial public offerings in the U.S. backed by venture capital are at their lowest level in decades, but new investment in early-stage companies hasn't been hit as hard. ... "Venture investing continues to percolate along," said Mark G. Heesen, president of the National Venture Capital Association. "This is the time to buy or work with entrepreneurs in very early companies, if you have the extra time and money." [Lynn Cowan, Wall Street Journal, Feb 23]
Angels Fly. Now, in the midst of a punishing economic downturn that is sparing few companies, [angels] are cutting back on their bets and threatening the very foundation of the technology economy. ... like all investors, many angels suffered deep losses when the market plunged last fall. ... Half of the investors surveyed in November by the Angel Capital Association, the industry’s trade group, said they invested less than they had predicted in 2008, and one-third said the number of deals and dollar amounts they invest would decrease again this year. [CC Miller and B Stone, New York Times, Feb 3]
After a stretch of lousy returns Silicon Valley's VCs are searching for companies with novel traits: rising revenue and profits. [Evan Hessel, Forbes]
$12 million is recommended for [Minnesota] angel investments in regional investment funds, including a 25 percent tax credit for investments in funds that invest in qualified businesses meeting defined criteria. The credit would be allowed only after an investment has been held for four years. [SSTI, Feb 4]
The last three months of 2008 may be remembered as the quarter when US venture-capital investing fell off a cliff, raising fears the worsening recession will dampen an entrepreneurial sector that's historically helped to regenerate New England business. [Boston Globe, Feb 2]
Venture capital investments in Connecticut businesses fell sharply [80%] in the fourth quarter of 2008
The financial crisis is causing venture capital firms to decide which of their young to foresake, creating awful dilemmas for the investors and the companies they are hoping to nurture. [Wall Street Journal, Jan 22]
Venture-capital investment dropped 30% in the fourth quarter to its lowest level since 2005, as the financial crisis threatened to cut off more funding for start-up companies. [Wall Street Journal, Jan 17] Furthermore, The president of the NVCA Mark Heesen expects that venture capitalists nationwide will invest about 10 percent less in young companies with high-growth potential than they did last year; "2009 is going to be rough," he said. [David Rail, Raleigh News & Observer, Jan 19]
Wisconsin was one of 20 states where locally based venture capital funds raised no money in 2008 [Milwaukee Journal Sentinel, Jan 20]
liquidity markets cut off. A dearth of initial public offerings and mergers has created a drought-like condition for early stage investors, according to a new report that sheds light on the troubled ecosystem of Silicon Valley... just seven venture-backed startups went public last year compared with 76 in 2007. Those seven IPOs poured $551 million back into venture capital pools versus the $6.8 billion raised in 2007. [Tom Abate, San Francisco Chronicle, Jan 3, 09] .... The number of entrepreneurial companies moving to the public stock market had fallen sharply even before last year’s IPO drought. Fewer than 50 companies went public each year between 2001-2008, compared with about 180 a year between 1991-1998. But the latest decline reflects structural changes in the financial industry that have made life harder for smaller companies, suggested Mr Doll. He said the technology IPO system had come to rely too much on a handful of big banks that no longer saw the business as profitable enough to be worthwhile. [Financial Times, Jan 4] If federal agency SBIR programs ever want to do anything to offer more good opportunities to the venture markets, it has to focus its money in companies and ideas with high technical risk followed by a decent business risk IF the technology actually works. But until the agency managers find something in such an outcome for them, why should they divert money from their agencies' purely government objectives?
Venture Collapse. The venture capital industry is staring at the most vicious shakeout in its history. Returns are pathetic for most funds, the public offering pipeline on which venture depends for its exit strategy is clamped shut, and with the shares of many big publicly traded tech companies swooning, those firms are less likely to buy up promising upstarts. .... It has been 11 years since the venture industry has returned more cash than it has plowed into investments, according to the NVCA. The industry is now managing $257 billion, up from $64 billion in 1997. .... “The industry today is still structured for big exit deals, and it’s not getting them,” says [fund manager Christopher]Douvos. [Rebecca Buckman, 12.18.08, Forbes Magazine dated January 12, 2009]
[in 2008] 59 game companies that raised more than $500 million worth of venture capital and angel funds [Dean Takahashi, Venture Beat, Dec 23] Which created more wealth per dollar: several SBIR companies building math models of things like rocket plumes, or the 59 game-makers?
Investment by angel groups declined at least 10% this year, according to the Angel Capital Association's (ACA) annual survey of angel group leaders. [SSTI, Dec 18]
VC Shrinkage. a survey of more than 400 venture capitalists suggests .. In 2009, less money will be available, especially for the youngest companies, and tech companies developing semiconductors and Internet software are expected to be hit hard. The venture capital that will be invested will mostly go to companies working on clean technology, biotech products and medical devices. [Sabine Vollmer, Raleigh News & Observer, Dec 17, 08]
Texas received about 4 percent of the nation’s total venture capital funding from January through June, ranking third behind California’s 50 percent and Massachusetts’ 10 percent. Since 2000, Texas has averaged about 5 percent of total U.S. venture capital investment. Nearly 38 percent of Texas venture capital investment during the first half of 2008 was directed to the industrial and energy sector, up from only 6 percent in 2002 [Dallas Federal Reserve, S/o08]
Cash-strapped investors are starting to renege on their commitments to venture-capital funds, dealing a blow to an industry that has been the bedrock of Silicon Valley start-ups. .... "Lawyers have said everyone should expect at least one default [from investors] in the next year," says Bryan Roberts, a managing general partner at Venrock, a Palo Alto, Calif., venture-capital firm. [P-W Tam and C Karmin, Wall Street Journal, Dec 8]
VCs Improvise. As venture-capital funds face a cash crunch driven by the financial downturn, they are taking extreme measures to ensure they can fund their investments. Some venture capitalists are selling their equity stakes in start-up companies at fire-sale valuations so they don't have to keep funding those businesses, allowing them to husband their remaining cash for other investments. [Pui-Wing Tam, Wall Street Journal, Nov 28]
Indiana is bucking a national downturn in venture-capital financing. Hoosier startups attracted $111.3 million in VC financing through the end of September -- more in the first nine months of 2008 than in each of the previous three years, according to the quarterly MoneyTree report compiled by PricewaterhouseCoopers and the National Venture Capital Association. [CD Marsan, Indianapolis Star, Nov 27]
Overall, the change in administration will be good for venture capitalists, [NVCA Pres Mark] Heesen said. “We do have a very good relationship with this new administration, and we can work with these people.” [Mass High Tech, Nov 15]
Venture capitalists invested $7.1 billion in companies during the third quarter of 2008, according to the latest Moneytree survey from PricewaterhouseCoopers and the National Venture Capital Association (NVCA). ....For the time being, seed and early stage investment is up slightly over the previous quarter and the same period last year. [SSTI, Nov 12]
Angel investing in Wisconsin will be dented by the global economic crisis, but not obliterated. That's the opinion of several investors attending the two-day Early Stage Symposium. Milwaukee Journal Sentinel, Nov 6]
Prof Shane's Myths of Angel Investing: #1: Angel investors are like VCs, they just invest less. angel investors are far more varied in their investments than venture capitalists. While VCs tend to focus almost exclusively on high-growth industries like technology, angels will invest in everything from the local dry cleaners to a restaurant. They tend to stick with industries they are familiar with. Plus, they are far more hands off than VCs. Most angels spend less than an hour a week with the companies they invest in. And fewer than 5% of businesses who receive angel money go on to get VC money; #2: Most angel investing is done by organized groups. Groups only account for 500 to 600 each year,and only 2% of all angel investment dollars come from organized groups or networks of angels. #3: Angels are wealthy and savvy investors. only 21% of angels meet the Securities and Exchange Commission’s requirements for being an “accredited investor” What’s more, the majority of angels don’t end up making money on their investments, and only 2% of businesses they invest in eventually become IPOs. And only 15% of angels do “extensive” research on the sectors of the businesses they fund; #4: Angels frequently invest $50,000 or $100,000 in businesses, sometimes up to $500,000 or $1 million. The median angel investment is around $10,000l #5: Many people invest in businesses of people they barely knew beforehand. Of all informal business investments, 92% are made by friends and family. Few are made by an “angel” who isn’t one of those. [Wall Street Journal, Oct 23]
VC investment in the Austin market has slowed 62% in the last year, new data shows. [Austin Business Journal, Oct 20]Venture capital finance deals in New England tech businesses dropped at triple the rate of the national decline during the third quarter, according to a report released Saturday morning. [Mass High Tech, Oct 18]
Some venture-backed companies are starting to close their doors. ..."In the next six months you'll see a lot of companies go down," says Ted Wang, a lawyer at Silicon Valley's Fenwick & West who works with emerging companies and venture firms. [Spencer Ante, Business Week, Oct 27]
More bad financial news: there were no venture capital-backed IPOs in the second quarter, the worst quarterly performance since 1978, according to a recent report by PricewaterhouseCoopers. “There is little indication that the market will recover anytime before the second quarter in 2009,” said Tracy Lefteroff, global managing partner of the Venture Capital and Private Equity Practice at PricewaterhouseCoopers. [Thomas Lee, Minneapolis Star Tribune, Sep 30]
"VCs are telling their companies, 'Look, it's going to be a hard year, so think very carefully about your expenses and ask if you need to spend that money.' They're saying, 'Be sure about the bets you make, because you're spending money that could be hard to get in the future.' " [Lori Hawkins, Austin American-Statesman, Oct 3] Can the government do some good for small high-tech companies AND the economy other than handout money to banks? Yes, it could push its SBIR into companies with an economic future instead of merely purchasing run-of-the-mill government R&D.
The amount of capital venture-backed companies generated during the third quarter through initial public offerings and mergers and acquisitions dropped 66% versus the same period last year, according to a new report from Dow Jones VentureSource. [Mass High Tech, Oct 1]
Clean technology startups once again raised a record amount of venture capital in the third quarter, $2.6 billion, with 42 percent of it going to companies in California .... But problems with the U.S. financial system means the torrid pace can't continue, the report warned, potentially threatening one of the bright spots in Silicon Valley's economy. [San Francisco Chronicle, Oct 1]
[Fred Wilson at] Union Square Ventures has built its portfolio making small bets on young companies. .. readers of TheFunded.com, a social networking site for entrepreneurs, rated him their favorite venture capitalist in 2007 ... the three-partner firm focuses on services that use the Web to change a market rather than simply make it more efficient. [Clair Cain Miller, New York Times, Sep 21]
European venture capitalists are investing less money in fewer companies, mirroring a trend seen in financing for American start-ups, according to a report Tuesday by Dow Jones VentureSource. Venture capital firms in Europe invested in 167 young companies in the second quarter, 42 percent fewer than in the period last year. Venture dollars invested declined 35 percent, to $1.3 billion. The quarter was the worst since at least 2000, when VentureSource started tracking European data. [Claire Cain Miller, Aug 26]
Google is working on plans to start a venture-capital arm ... Corporate venture-capital arms have been hampered by challenges that traditional venture-capital businesses don't face. Venture capitalists invest in private start-ups at an early stage, usually in hopes of a big payout if the company is sold or if its stock goes public. Many start-ups fear that taking corporate money limits their options and comes with strings that could turn away other potential investors -- such as a right to buy the company at a later date. [Jessica Vescellaro, Wall Street Journal, Jul 31]
Optimism Still Flowing. The pace of U.S. venture capital investments remained steady at $7.4 billion during the second quarter despite a wobbly stock market that has made it increasingly difficult for the financiers of new ideas to cash out of startups. [Michael Liedtke, AP, Jul 19] The pace of such investment mocks the SBIR claim that government handouts are necessary to get innovation, especially when so much of the money winds up in the hands of life-style companies who can make no economic claim of success for the nation. Oh yes, they do claim that they are better off.
From April to June, venture investments around the globe in clean-tech reached $2 billion, an all-time record, said the study from the Cleantech Group, a San Francisco research and strategy firm. That's up 58 percent from the same period in 2007 and 48 percent from the first three months of 2008, said Brian Fan, the group's senior director of research. [San Jose Mercury News, Jul 8]
The first quarter in 30 years without an IPO prompted the NVCA and its fellow travelers on Wall Street to launch a lobbying campaign to reform post-Enron reforms that raised the financial hurdles for start-ups to go public. ... Todd Dagres of Spark Capital, in a press release, seemed dismissive of the NVCA's talk that the entrepreneurial world faced a "crisis": "The data is artificial. Facebook and several other privates could have gone public but chose not to. The issue is overall liquidity. If a private company sells to a public company - it's similar to going public with less risk." [San Jose Mercury News, Jul 2] But then, if you want something from Congress , you need to talk "crisis" since they are so busy dialing for dollars.
Adjusting for population and focusing on seed- and early-stage capital revealed that several states, including Washington, the District of Columbia, Colorado, Maryland and Connecticut, are seeing impressive increases in capital opportunities for early-stage entrepreneurs, even though their achievements are often overshadowed by the sheer volume of dollars invested in California and Massachusetts. [SSTI, Jul 2]
The second quarter of this year is to be the first in more than 30 years without a venture-capital-backed IPO in the U.S., according to a survey by the National Venture Capital Association, [Wall Street Journal, Jun 30]
Procedural justice may be the reason why venture capitalists favor the entrepreneurs who communicate with them most; a willingness to observe the dictates of process is taken as a proxy for quality. [David Shaywitz, reviewing Brafman & Brafman' Sway, Wall Street Journal, Jun 24]
Kleiner Perkins is now laying a bet on a breakthrough technology surrounding stem cells derived from adult humans. ... backing a new Bay Area company, iZumi Bio Inc., which had its public premiere Monday with the announcement of a research collaboration with the J. David Gladstone Institutes, based in San Francisco. The nonprofit institute is a center of scientific work on novel methods of "reprogramming" adult cells to recover the versatile properties of embryonic stem cells, which can morph into any cell type in the body. [Bernadette Tansey, San Francisco Chronicle, Jun 17, 08]
Wisconsin is one of the venture capital “have-nots,” said Susan P. Strommer, president and chief executive officer of the National Association of Seed and Venture Funds, a network of 8,000 early-stage investment professionals and organizations. A whopping 60% of all venture capital dollars go to companies in California and Massachusetts, Strommer said. Wisconsin companies pull in just 0.3% of all the venture capital invested in the U.S., she said. That statistic, plus the fact that venture capitalists now put just 4% of their money into start-up companies, compared with 17% in 1995, shows why it’s so important for the state to build its own infrastructure for investing in young companies, Strommer said. [Kathleen Gallagher, Milwaukee Journal Sentinel, Jun 11] The idea of "have-not" empowers representative politicians to correct an "unfair" imbalance. Their problem is that we cannot have "fair" balance and a nationally efficient market-based innovation machine. The same argument applies to SBIR promoters who argue "fair share" as the basis for redirecting government investment in innovation to politically favored companies.
Biotechnology companies in San Diego and nationwide had little trouble raising money last year, with venture capital, stock offerings and debt deals pumping a near-record $21 billion into the sector. But the biotech industry yet again missed a milestone it's been striving for over the past three decades – overall profitability – although it came closer than it ever has before. [Mike Freeman, San Diego Union Tribune, May 20]
"Blank-check companies" started off 2008 by outpacing the number of traditional IPOs listed in the U.S. But they have begun to lag behind as investors show signs of buyer's fatigue. ... empty shells that raise money through initial public offerings to eventually buy operating businesses, made up nearly a quarter of all initial public offerings in the U.S. last year, according to Dealogic. [Wall Street Journal, May 19]
Clean-tech venture capitalists have taken a shine to makers of LEDs and other bright lights, seeing a growing potential for these semiconductor-based light sources in streetlights and parking lots, in concert venues and gymnasiums ... VC investments in lighting technologies reached $100 million in the first quarter of 2008, ranking behind only biofuel and solar among clean-tech categories. [Matt Nauman, San Jose Mercury News, May 19]
Capital, Capital, Capital. Lightspeed Venture Partners, flexing its success in the ongoing shakeout of venture capital business, announced Monday it had closed a new $800 million investment fund. Issuing press releases in English, Mandarin, Hindi and Hebrew in the wake of two new funds - the $1.2 billion raised by Kleiner Perkins Caufield & Byers, including $700 million in its 13th early-stage fund, and $500 million in its new "Green Growth" fund. [San Jose Mercury News, May 13]
Kleiner Perkins will invest $500 M in green technology companies that have passed their earliest stages of growth and are maturing. The venture capital firm also will invest in green-tech startup companies as part of another investment fund it introduced Thursday, which will invest $700 M over the next three years in startups. [San Francisco Chronicle, May 2]
Venture capital investments in New England companies fell 40% in the first quarter -- to its lowest level in a decade . [Mass High Tech, Apr 21, 08]
Venture capitalists sank $6.8 billion into U.S. companies in the first quarter, down 8% from a year earlier, according to data from Ernst & Young and VentureSource. [Tomio Geron, Wall Street Journal, Apr 19]
The credit crunch and economic downturn have some angels feeling skittish. But others see opportunity: Studies show that the best time to start a business is when the economy is down. That's because entrepreneurs with good ideas will find cheaper land, labor, supplier contracts, and other ingredients that go into starting a business. Angels that back such ventures can earn impressive long-term returns—one study cites a rate of return of about 27%, on average, or 2.6 times the investment in 3.5 years. [Chris Farrell, Business Week, Apr 28]
As George Lipper noted for the National Association of Seed and Venture Funds, California claimed about 40% of national venture investment in 1995, a figure which had grown to about 47% by the end of 2007. [SSTI, Apr 16]
Sequential VC Partners. Terry McGuire, a partner with nearby Polaris Venture Partners, was familiar with BIND's nanoparticle technology to treat tumors and heart disease. He's also a friend, and frequent business partner, of Robert Langer, the decorated scientist who runs the MIT lab. That relationship often gives Polaris first dibs on cutting-edge medical technology developed there. Together, McGuire and Langer have launched 13 companies over the past 15 years and become a model for other venture capitalists scrambling to commercialize new drug and medical-device research. [Rebecca Buckman, Wall Street Journal, Apr 14, 08]
[VC's Grandfather Georges] Doriot was as much focused on the personal qualities of the founding team as the soundness of the business idea. "His famous saying was, 'I'll take an A individual with a B idea over a B individual with an A idea,' " says Dan Holland, who began working for Doriot as an associate in 1969, helping identify and manage investments. [Scott Kirsner, Boston Globe, Apr 7]
With the economic downturn souring market demand for venture-backed start-ups, fewer were sold or went public in the first three months of 2008 than in any quarter in recent years, according to figures released yesterday by the National Venture Capital Association. [Boston Globe, Apr 3]
Angel investors are on track to be more cautious with investments in light of the recent volatility in the economy, according to a new study. The 2007 Angel Market Analysis from the Center for Venture Research at the University of New Hampshire in Durham, N.H., showed mixed signs and exhibited little change from investment dollars the previous year. Total investments in 2007 were $26 billion, an increase of 1.8 percent over 2006. However, a total of 57,120 entrepreneurial ventures received angel funding in 2007, a 12 percent increase from 2006. The number of active investors in 2007 was 258,200 individuals, an increase of 10.3 percent over 2006, according to the UNH study. [Dayton Business Journal, Apr 1]
venture capital is still rolling in. [NVCA] reports that 2007 saw the highest level of VC investments - $29.4 billion pumped into 3,813 deals - since 2001. But don't be too relieved by that last figure. As we know from those doomed 2001-era investments, ebullience among venture capitalists can be a very bad omen, if not a sure-fire sign of a market top. ... In other words, the Valley is probably going to have a difficult time keeping up its us-vs.-them mentality. [Adam Lashinsky, Fortune, Mar 20] If VC, industry R&D, and capital investment all decline, look for the SBIR advocates to make the intellectually bankrupt that putting more government money into small high-techs would be good for America. Actually, it could be good if the government R&D agencies were capable of managing it intelligently. Which they have showed no sign of, and which the SBIR advocates wouldn't like anyway as the money went to an entirely different class of firm than supports SBIR politics.
Silicon Wadi. Land of milk and start-ups ... And, as in California, there are plenty of well-funded venture-capital (VC) firms providing cash. ... many entrepreneurs cut their teeth in the Israeli army, which has always needed to compensate for the county's lack of manpower and resources with cutting-edge technology, mainly in communications. ... The focus on innovation and technology, and a relative lack of interest in management and marketing, explain why Israeli entrepreneurs tend to sell out early, mostly to big foreign firms, rather than build up their companies. ... And one day soon, Chinese engineers, in particular, will be as good at building start-ups and developing intellectual property, warns Zohar Zisapel, a serial entrepreneur and chairman of RAD, a group of telecoms-equipment firms. After all, he says, “the Chinese mother is like the Jewish mother—quite demanding.” [The Economist, Mar 19]
Seattle was the third-fastest-growing U.S. investment hub of the past 10 years, according to a report by PricewaterhouseCoopers and the National Venture Capital Association. The study, known as the MoneyTree Report, indicated local startups raised some $1.25 billion in 2007, up 211 percent since 1997. Two other areas, New Mexico and Pittsburgh, showed even faster growth [rate] over the decade, [Seattle Times, Mar 11]
Putting People First. Recent data indicate that early-stage start-ups are once again attracting venture capital. But that renewed interest may not necessarily translate into new local medical device companies, experts say. Entellus' story suggests that VCs are as picky as ever and that people -- not ideas or technology -- carry more weight with investors. [Thomes Lee, Minneapolis Star-Tribune, Jan 29]
Venture capitalists raised $34.7 billion in funds in 2007, an increase of 9.4% and the most the industry has raised since 2001, when it raised $38.8 billion. [eWeek.com, Jan 16]
Venture capital investment in renewable energy reached an unprecedented level of $3.4 billion in 2007, according to newly released data from Greentech Media Inc. [Boston Globe, Jan 16]
Clarian Health Ventures -- the venture capital firm quietly launched last year by Indianapolis-based hospital system Clarian Health -- is planning a schmooze-fest Jan. 29 at the Conrad hotel to officially unveil its new fund. It's an invitation-only affair expected to attract hundreds of physicians and scientists from Clarian and Indiana University School of Medicine, as well as local entrepreneurs, venture investors and others. ... hopes to build a portfolio of 10 to 15 companies [Indianapolis Star, Jan 14]
Expensive Oil to Sustain Gusher of Energy IPOs. Among the deals already queued up for this year are a host of midstream energy companies, which primarily operate pipelines to transport oil and gas in the U.S [Lynn Cowan, Wall Street Journal, Jan 7]
The amount of money raised through IPOs in New York last year surpassed London for the first time in three years, reaching the highest levels since the internet boom. [Financial Times, Jan 3, 08]
Yet it will still be good to be a venture capitalist in 2008 - at least for those who survive the Darwinian shakeout. [SD Harris, San Jose Mercury News, Dec 28, 07]
Venture capital investments, which fund innovative businesses and technologies that can spark economic growth, are set to reach their highest total since 2001. The returns of VC funds for the years 2003-2007 have been 7%, 15%, 12%, 18%, 18%. Not the heady 40% of the dot.com era, but still US Treasuries. SBIR's return on investment, by contrast, has been undetermined and likely to remain so. The VCs invest in the good stuff and SBIR invests in (you name it).
Overall, seven of the nine IPOs that priced earlier this week ended their first day with gains, and five experienced double-digit percentage gains. [Wall Street Journal, Dec 15] The IPO of integrated circuit maker Intellon rose 13%.
Austin-based Santé Ventures is set to announce today that it has raised $130 M to invest in medical technology and health care services in Texas and the central United States. [Lori Hawkins, Austin American-Statesman, Dec 17]
In Silicon Valley's freewheeling start-up world, not a week seems to go by without a crop of companies sprouting up. ... Boston venture-capital firm Spark Capital is starting a push to eliminate one barrier to the job-hopping and cross-pollination that is often credited as a factor in Silicon Valley's entrepreneurial culture, asking Governor Deval L. Patrick and fellow venture capitalists to eliminate the noncompete contract clauses that may prohibit an employee from moving to a competitor for months or years. [Carolyn Johnson, Boston Globe, Dec 7]
The amount of money raised through IPOs in New York is set to surpass London for the first time in three years as companies fuel a surge in IPO volume in spite of the turmoil in capital markets. [Financial Times, November 25] If the government wants SBIR to spur private capital investment, it should push its SBIR money toward companies with ideas that have the most potential for making money.
Angels Doing Well. The largest study on the financial returns of angel investors in North America, released in a new report today by the Ewing Marion Kauffman Foundation and the Angel Capital Education Foundation, shows that angel investors participating in organized angel groups achieved an average 27 percent internal rate of return on their investments. Overall, this set of angel investors affiliated with angel groups experienced exits that generated 2.6 times their invested capital in 3.5 years from investment to exit. [Ewing Marion Kauffman Foundation, Nov 12]
Venture funding for all industries has fallen by more than half since 1999, ...to $26B in 2006, according to the National Venture Capital Association. Funding for Internet startups is running at roughly $1B a quarter in 2007, down from a high of $14B in the first quarter of 2000. ...a few hurdles between Landy Ung and her dream of growing her startup into a household name. ...her only outside funding comes from her mom's fried chicken restaurant, her only full-time programmer is her boyfriend, who has a day job. [Ellen Simon, AP, Nov 10]
Elsewhere in the Valley, the dearth of IPOs today could contain the seeds of the next bust. Because relatively few venture-backed companies are going public, many start-ups are relying on mergers and acquisitions for cash. ... Josh Lerner, a Harvard Business School professor who studies venture capital (and SBIR), says the number of "me-too" tech companies is even greater than it was in the late 1990s. ... The demise of such start-ups won't be pretty for Silicon Valley, but the shock waves sent out by any new bust likely won't travel as far as they did last time. [Rebecca Buckman, Wall Street Journal, Nov 5]
Oregon startups, long starved for attention from the venture capital community, are again feeling the love. A... VCs have invested nearly $200 M in Oregon companies this year. [The Oregonian, Nov 2, 07]
The U.S. venture and angel markets appear to have fully recovered from their slump earlier this decade. Pricewaterhouse Coopers' Moneytree Survey reports that as of the third quarter, 2007 is on track to become the most active year for venture investment since 2001. [SSTI, Oct 31]
Angel Dust. US business angels, many of them wealthy entrepreneurs who have sold their companies, injected $11.9 bn into 24,000 ventures in the first half of this year, [said] Jeffrey E. Sohl, director at the University of New Hampshire's Center for Venture Research. [Robt Weisman, Boston Globe, Oct 30]
Entrepreneurs visiting a venture capitalist to ask for money sometimes feel like kids asking Dad for an allowance. ... But every few years, Dad has to hit up Grandpa for a handout. ... Battery Ventures raised a $750M fund this year - that's made it harder for them to invest small sums into fledgling companies, Andonian says. DACE's strategy will be to put about $5 million over time into each company, and then ideally sell it to a larger firm. [Scot Kirsner, Boston.com, Oct 28]
the IPO of Chinese software maker Longtop Financial Technologies Ltd. up 85% yesterday on the NYSE, the second-best IPO debut of the year [WSJ, Oct 25]
Venture capital investing in New England reached a six-year high in the third quarter [Boston Globe, Oct 20] Venture capitalists invested an average of $20B every three months during 1999 and 2000, emboldened by the soaring stock prices of young and mostly unprofitable Internet startups. This time Wall Street has shown little inclination to embrace unproven startups, one of the factors that has caused venture capitalists to show more restraint. [Albany Times-Union, Oct 20] venture capital investing in Austin posted its strongest quarter in six years. [Austin American-Statesman, Oct 20]
Next month, the New England Venture Network, a regional social group for venture capitalists, is launching VentureNetwork.vc, an online social network for professionals looking for another channel to connect and talk shop. [Carolyn Johnson, Boston Globe, Oct 22]
Southern California's biggest venture capital firm has halted fundraising for its latest venture fund amid the departure of several principals who were spearheading the firm's push into life sciences investments. ... Since it was founded in 1985, Enterprise Partners Venture Capital has raised close to $1.1B through six venture funds, which invested to varying degrees in technology, software and life sciences companies. [Bruce Bigelow, San Diego Union Tribune, Oct 18]
a lot of large U.S. companies (some who were small startups just a little while ago) get new technology more by buying early stage companies that have developed their technology to the level where it is just hitting the market place, rather than by paying university researchers (or even internal research groups) to do the basic research. ... Those companies (perhaps products of IPOs only a few years before) pay a premium for new technology, but they avoid most of the early stage risk. The VCs get handsomely rewarded for their successful bets [Rod Brooks, Xconomy.com, Sep 10] But as Brooks notes, the scheme depends on government funding university research from which the start-ups spring.
The angel market may be showing the first signs of leveling off following four years of moderate sustained growth. Angel investment in U.S. companies fell 6% in the first two quarters of 2007, according to the University of New Hampshire's Center for Venture Research (CVR).
venture investment is most desirable when the industry of the start-up company aligns with an area of expertise for the VC firm ...Despite the visibility of the VC industry, only 10 percent of start-ups receive VC support. The remaining 90 percent turn elsewhere for outside funding, often from commercial banks. ... Purchase "Financing Entrepreneurship: Bank Finance Versus Venture Capital" at: http://www.sciencedirect.com/science/journal/08839026 [SSTI, Oct 3]
Money Seeking Ideas. Ignition Partners, a Bellevue WA-based venture-capital firm, raised $675 M of which $400 M will be for traditional VC in early-stage technology companies [Seattle Times. Oct 2] Business prospects required, not just sweet technology. For support for really nice science, try the federal government. Unfortunately, though, for small firms, the Executive Branch sees no competitive advantage in small company science; only politicians push science money toward small business. Actually, economics research has established a small business innovation advantage in a narrow slice - innovative technology in market-driven small firms under 20 employees.
A new Boston VC firm launched a $378M fund to invest in early-stage life science companies. Third Rock Ventures LLC is a team of former Millennium Pharmaceuticals Inc. executives [Mass High Tech, Sep 14]
Venture Lending. Venture-capital funding may be an alternative for some startup companies. But many entrepreneurs don't want to give VC firms an ownership stake in their business, or they can't attract venture investments. Most VC firms shun staid businesses with established markets in favor of “fast-growth” startups with “disruptive” technologies that promise to revolutionize their industry. One solution is what Miller calls “venture lending,” a concept underlying the creation of Huntington Capital, a Carmel Valley firm he co-founded in 2001. ... Huntington offers loans to well-established, privately held businesses with sales that range from $5 M to $50 M a year. [Bruce Bigelow, San Diego Union Tribune, Sep 14]
As you hear the SBIR advocates bleat about a lack of VC funding for companies that wouldn't get it anyway, consider: $52M more VC for SolFocus (Mountain View, CA) atop the last tranche of $32M. [Matt Marshall, Venture Beat, Sep 5] ; Plextronics, a Pittsburgh start-up developing organic photovoltaic technology for solar power, said it has raised $20.6M in a second round [Matt MarshallVenture Beat, Sep 5] Spatial Photonics, a Sunnyvale CA start-up developing high-definition microdisplays that will compete with existing microdisplay technologies, has raised about $26 M in a second round [Matt Marshall, Venture Beat, Sep 5]; Kovio, a Sunnyvale developer of semiconductor products using thin-film technologies, or "printed electronics," has raised $19.5 million in the first part of a fourth (series D) round; Sunnyvale-based [Matt Marshall, Venture Beat, Sep 5]; FlowCardia, a medical-device maker building catheter systems that bore holes in blood clots, raised $30 million in a third funding round; Aryx Therapeutics, a Fremont biotech company that derives ostensibly safer versions of existing drugs, filed to raise an $85.3 M IPO.. [Matt Marshall, Venture Beat, Sep 5]
Some top venture-capital firms eager to expand into new markets are twisting their investors' arms to get them to go along -- ... In some cases, investors "have really felt like there's been a gun held to their heads," says Josh Lerner, a Harvard Business School professor [Wall Street Journal, Aug 28]
Technology start-ups are certainly back in vogue. ... VMware's flotation is a good example of how much has changed. It was able to list on the stockmarket in the teeth of a financial gale only because it actually has a business. ... Since the costs of building new technology services are still coming down, people will just keep coming up with new ones—even if they do not make a lot of money and reach only a small audience. [The Economist, Aug 16] Don't worry about SBIR; the advocates will still plead for more program mostly for companies and technologies that have zero market prospects. Need another rocket plume model?
Seeking Angels. Some tips from Knox Massey, executive director of Atlanta Technology Angels: ones who understand your business, be patient, network, prepare for a long term relationship, listen to their advice. [Wall Street Journal, Aug 13]
GUY KAWASAKI, venture capitalist, business pundit and Apple’s first “evangelist,” posited that it’s “easy” to become an Internet millionaire, as long as you have a good idea. You don’t even have to work hard: a couple of hours a day in your underwear should be enough. No Plan, No Capital, No Model...No Problem (guykawasaki.com) Hot or Not? (hotornot.com) Plentyoffish (plentyoffish.com) Steve Jobs demos Apple Macintosh, 1984 (youtube.com) The Flip Side of Entrepreneurship (guykawasaki.com) Hidden Credit Card Charges When Charging Abroad (gadling.com) Guilt won't stop impulsive shoppers, researchers say (cbc.ca) Mr. Kawasaki was host of a panel discussion June 14 at the Churchill Club, the Silicon Valley public affairs forum, titled “No Plan, No Capital, No Model ... No Problem: Companies That Defied What V.C.’s Will Tell You.” Video and audio of the event are available on Mr. Kawasaki’s blog, How to Change the World blog.guykawasaki.com. [Alex Eben Meyer, New York Times, Aug 11]
Web Site Puts the 'Vent' Into Venture Capital ... TheFunded lets entrepreneurs rate venture firms according to five different criteria (track record, operating competence, pitching efficiency, favorable deal terms and execution assistance) and also write reviews of firms and their individual partners. Posters can choose to be anonymous. [Rebecca Buckman, Wall Street Journal, Aug 7] Don't like capitalists in your pet business? There's always government funding where the money doesn't care whether your business succeeds and grows in value.
Fewer dollars, more deals. That was the venture capital snapshot in the second quarter, both in New England and across the nation, according to the quarterly MoneyTree report. [Robt Weisman, Boston Globe, Aug 7]
Accelerator, Seattle's souped-up biotech incubator, has raised $22M in its third investment round. The funds will help start up to six emerging companies over the next two or three years[Seattle Times, Aug 3]
National venture funding was $7.4B in the second quarter, up 8% from a year ago. Not the kind of numbers that suggest such a dearth that government intervention in the form of SBIR, for example, is needed, even if it could be run economically intelligently by government bureaus.
Every Fool Deserves an Angel. Entrepreneurs looking to start or expand a business remain underserved by the conventional equity markets – in fact, since 2000, venture capital investment in startup and early-stage companies has declined by more than 80%. Chairwoman Nydia M. Velázquez introduced the Angels Nurture Growing Entrepreneurs into Long Term Successes (ANGELS) Act, which establishes a new program and tax credit to promote this kind of less-formal investment in small businesses through angel networks. [press release House SB Committee, Jun 25] Politicians love to find a problem at which they can throw money to constituents without having to first raise the money. But to feed all the American inventors and innovators who think they deserve an investment of Other People's Money, there is not enough money in all of China's dollar reserves. Capitalism has a working mechanism for matching dreamy rich folk with dreamy entrepreneurs, and to judge by the amount of capital poured into the sub-prime mortgage market, there is no shortage of ready money for chancy enterprises. There is no obvious market failure in American innovation that needs government intervention; there is only failure of mediocre ideas to attract capital being directed to more profitable enterprises. Angels do not need tax breaks to do what they would do anyway. The larger problem is a steady accrual of government intervention in American life - anything bad should be illegal and anything good should be done by government.
Sodhani is turning the chip maker's sprawling investment arm - one of the world's largest and most active corporate venture capital organizations - in a dramatic new direction. Once a back-seat investor that let others "lead," or structure deals, Intel Capital is displaying a new aggressiveness. It is stepping more nimbly, spending more money and shedding its reputation for slow decision-making. [Mark Boselt, San Jose Mercury News, Jun 28]
IPOs in Europe. Solaria's IPO is the latest in a long string of initial public offerings from European renewable-energy companies, ... Interest in solar stocks and alternative sources of energy has climbed as governments have pushed companies to reduce carbon emissions and oil prices have climbed. The European Photovoltaic Industry Association estimates the global market for solar power, measured by sales, will grow by an average of 37% annually through 2010. [David Roman, Wall Street Journal, Jun 18, 07]
VC Going Where? "Central and Eastern Europe are already a better play" than China and India, says Scott Maxwell, co-founder of OpenView, which has invested 30% of a $100 million global technology fund in the region. "The technologies are more sophisticated." [Business Week, Jun 11, 07] The risks in Russia especially are compounded by the lack of any working rule of law. So, why not invest in Wichita or Spokane? Venture seeks its own risks and opportunities; only governments try to breed money at home with whatever is available and with other people's money with no penalty for failure.
Sizing Up Solar-Power IPOs Two profitable Chinese outfits are going public, but sunstruck investors should remember last year's disappointing ethanol offerings [Business Week, May 30]
As more technology companies go public, the dot-com bust of seven years ago seems to have become a distant memory on Wall Street. Investors are once again scoring double-digit first-day "pops" on the stocks. Smaller companies, some in recently shunned sectors such as software, are seeking stock-market listings. But this time around, investors expect companies to be relatively mature and on a solid financial footing. At the height of the dot-com craze in 1999 and 2000, some investors appeared unconcerned with a technology company's business plan and lack of profitability. [Yvonne Ball, Wall Street Journal, May 29] one of the hottest months in years for Massachusetts companies that want to go public. Five companies have already made it onto public markets and raised $459 million selling shares this month.[Boston Globe, May 30] But, not everywhere: According to the latest figures from the British Venture Capital Association, the average return on venture capital over five years has been minus 4.8 per cent a year and over 10 years minus 1.1 per cent per annum. That compares with an exceptionally good 27.3 per cent per annum over five years and 22.2 per cent over 10 years from large management buyouts. [The Independent, May 26]
"We've seen one of the heaviest periods of filings in the last couple of years," said John Fitzgibbon, an IPO analyst and founder of IPOScoop.com. "They seem to be priming the pump for the summer rush." [Yvonne Ball, Wall Street Journal, May 21]
Venture-backed companies, the [NVCA] study estimates, accounted for 10 million jobs and $2.1 trillion in revenue in 2005 ... But some skeptics argue that the study, which is being released today, overstates the effect of venture-capital financing. [David Ranii, Raleigh News and Observer, Mar 21]
Southwest Opportunity, a new Austin buyout firm, plans to invest in small to midsize companies.
Venture-capital investment flooded into Chinese companies in 2006, rising 55% from the previous year, with more-mature start-up companies attracting money like never before. [Wall Street Journal, Feb 13]
Exit to Sweden. A gaggle of VCs, that reads like a who's who list of Sand Hill Road heavies, exited their investment in Entrisphere, (Santa Clara, CA; no SBIR) by selling it to the Swedish telecom giant Ericsson, a world-leading provider of mobile network equipment. Its 140 employees develops products for the next generation of IP-based network technology known as Gigabit Passive Optical Network, or GPON. [SFGate.com, Feb 12]
A group of Utah angel investors is willing to back your business idea with cash - if it's judged the best in a competition for seed capital that will be held during the Governor's Utah Economic Summit in Salt Lake City on March 22. The winner will receive an equity investment of as much as $100,000 [Paul Beebe, Salt Lake Tribune, Feb 9]
Last year was the best for venture-backed IPOs since the bubble burst, and this year looks even better. [San Jose Mercury News, Feb 11] Of course if you are getting or seeking DOD SBIR, the don't expect getting venture money since DOD doesn't care about future investment.
Silicon Valley pundits are predicting 2007 will be the biggest year [for tech IPOs] since 2000 when 170 high-tech companies sold nearly $19 B in IPOs[Business Week, Jan 8]
A Central Texas angel investing group, started last year to fill a void in backing for startups, is beginning to pump money into young Austin companies. The group has committed a total of $750,000 to companies, with two deals nearing completion: AccuWater Inc., which makes an irrigation monitoring system, and NaturallyCurly.com, a product and social network Web site for people with curly hair. [Austin American-Statesman, Jan 25]
Angels Are Out There. Ed Rudman is a cautious man. He has spent a lifetime steering wealthy clients away from risky investments, and carefully tending their fortunes for future generations. So his latest investment might come as a shock. At 69, Rudman is putting his own money into a start-up drug developer with eight employees in a tiny lab in Cambridge. ... One among the million, Rudman was diagnosed with Parkinson's in 1997. Suddenly, this man so accustomed to discretion in the financial matters of others -- clients like astronaut John Glenn and Philadelphia Eagles owner Jeffrey Lurie -- had a secret of his own, and he kept it for seven long years. [Beth Healy. Boston Globe, Jan 16, 07]
In Michigan, VCs .. RPM Ventures, are selectively putting money and counsel into technology-driven startups, including software and materials companies, that they believe offer the means of innovation to older, larger and perhaps less nimble manufacturing firms. RPM's strategy is to identify and invest early in companies with products or technology-based services that are sold to Midwest manufacturers and other customers to make them more competitive, allowing them to become more efficient internally and to react quicker. [John McClenahen, Rust Belt Rebound?, Industry Week, Dec 1, 06]
"No one wants to write the first check. Everyone wants to write the second check," said Jordan Dolin, chief executive of Emmi Solutions, which produces Internet-delivered patient-education tutorials on common medical procedures.
U.S. venture investing is outpacing last year ... entrepreneurship is alive and well and growing as fast as ever. Also, VC has become a global phenomenon. ... seed and early-stage investments are on the rise ... Software was one area that saw a decline. Investments in software companies dropped 19 percent [San Jose Merc Mercury News, Nov 12] SBIR on the other hand is alive but sick. Most of the money goes to contract service firms with little taste for the vicissitudes of the market. In Jon Baron's words: SBIR dollars as an end in itself.
Charles River Ventures plans to roll out a funding program today meant to help a new generation of low-cost Internet entrepreneurs rapidly launch new ideas before raising venture funding. ... its new CRV QuickStart program, will offer such entrepreneurs loans of as much as $250,000, known as ‘‘convertible notes’’ — meaning the venture firm can convert them into equity if and when the start-up raises its first round of venture capital. [Robert Weisman, Boston Globe, Nov 1]
Central Texas companies raised the most venture capital in five years. Twenty-one companies raised $206.8 M a 126% increase over last year. [Austin American-Statesman, Oct 24, 06] None shows up in SBIR lists. Meanwhile, VC was down 25% in the Triangle area of North Carolina, says the News-Observer. And down 52% from a much smaller base in Maryland.
About 30 potential [accredited] investors got a sneak peek last week at some promising technologies coming out of Arizona State University. It was the inaugural meeting of the Arizona Technology Investor Forum, a group designed to introduce well-heeled investors to up-and-coming companies spawned by university technology. [Arizona Republic, Oct 6] Nice idea, won't do any harm except possible leaks of proprietary information. Not clear it does much good, but as long as ange,s show up, it's at least entertainment.
What trends do you foresee in venture capital investing? A. In the near term, Silicon Valley and conventional technology sectors, the Internet and biotech, will be where the bulk of the dollars will go. But there’s definitely a globalization occurring. And there is movement into new sectors. And within information technology and within life sciences, there is a shift in what kinds of companies are getting funded and their locations. [Bob Higgins, New York Times, Sep 24]The technology sector hasn't been particularly kind to IPO investors this year. Offerings in the industry have posted an average one-day return of 5.6% so far this year, compared with 7.2% across all other sectors, according to data from Dealogic. Total volume for all technology stock sold to investors -- including IPOs and follow-ons -- is down 15% so far this year, compared with the same period in 2005, the data tracker says. [Wall Street Journal, Sep 18]
In-Q-Tel, the venture capital arm of the CIA and other intelligence agencies, has hired an Intel Corp. manager with a background in cyber security as its new chief executive. Christopher A.R. Darby. [Washington Post, Aug 29]
make no mistake [about cleantech], Mr. Parker said. “This is not the venture equivalent of socially responsible investing,” he insisted. It’s about money, Mr. Parker said. And venture capitalists are clamoring to get in. In the first two quarters, venture capitalists invested $379 million in 30 cleantech companies, according to the National Venture Capital Association. That is up from $230.8 million in 27 companies in all of 2005. The fervor is so strong, some critics say, that the cleantech label is being attached to concepts that only marginally fill the bill [Matt Richtel, New York Times, Aug 25]
[New Enterprise Associates] announced a new $2.5 B venture fund, the largest in its 28-year history and the second-largest the industry has ever seen. More surprising is that NEA will spend up to half of it on high-risk deals most VCs spurn: mega-investments in money- losing businesses, many of which haven't gotten their technologies to work yet. Some of the money will prop up cash-burning public companies that can't otherwise raise capital. In other deals, NEA will acquire unproven drugs -- many with U.S. regulatory approval still years away -- from Big Pharma outfits and build startups around them. [Business Weeek, Sep 4]
Venture capital infusions into Utah's economy plunged 80% in the second quarter, to $21M, but analysts insist that the state has lost none of its allure to investors. [Salt Lake Tribune, Jul 27]
VC investing in the Philadelphia region reached its highest level since 2001, driven by strong interest in biotechnology and life sciences. [philly.com, Jul 25]
More Angels. The number of organized angel investor groups has increased almost 60% in the last three years ... in 2005, the average angel group invested $1.45M with each individual investor contributing an average of $33,236 per deal. [Melanie Brooks, Inc, Jul 21]
the second quarter helped Central Texas post its strongest venture capital quarter in two years. Twenty-one companies raised $170.5 million during the quarter, a 134% increase from the same quarter a year ago, according to a survey by PricewaterhouseCoopers, Thomson Financial and the National Venture Capital Association. [Austin Statesman-American, Jul 25]
Ignition. Ignition Partners.. raised $80M last month to top off its already-robust $320M fund, making it the largest information-technology fund in [WA]. ... Earlier this year, it raised $200M to invest in China. [Tricia Duryee, Seattle Times, Jul 24]
VC Yard Sale. most traditional venture investors are still searching for new start-ups that could bring them Google-like returns. Still, the later-stage survivor companies are becoming more popular. That is partly because such firms are closer to staging possible IPOs and returning money to investors than tiny start-ups. [Rebecca Buckman, Wall Street Journal, Jul 18]
Better Money Elsewhere. In-Q-Tel has lost three managing general partners over the past year. Gilman Louie's $800K a year couldn't keep him forever in what seems to have become a training ground for VCs general partners. until now, we've been surprised that In-Q-Tel had been doing as well as it has -- [story from Silicon Beat]
VCs have raised $18B so far this year, 41% more than last year.
Swallowing a Pill Company. Since 2003, Bain & Co sees six buyouts for every IPO as The median value of biotech acquisitions last year nearly tripled to $170 M [from] the previous year. ...reflects a newfound hunger on the part of major pharmaceutical companies for drug candidates to fill their depleted pipelines. [David Hamilton, Wall Street Journal, Jul 13]
Venture capital firm DFJ Element has raised a record-sized fund [$284 M] for investing in green technology companies, the latest sign that this area is red-hot. ... Limited partners in the new fund include CalPERS, Swiss Re, Coca Cola, ITT, Robeco, LA City Employees Retirement System, WP Global, and British Airways to name a few [siliconbeat.com, Jun 30]
In 2005, venture capitalists invested $2.54 billion in 301 deals in the San Diego area and in Los Angeles, Ventura, Riverside and Orange counties, a 17 percent increase in dollars over 2004. By contrast, the industry invested $2.67 billion in New England, a 13 percent decline in funds. [New York Times, Jul 2]
Intel Capital funded four more Chinese start-ups. Last year 60% of its start-up investments went abroad, up from 40% in 2004. [Wall Street Journal, Jun 27]
Worth More, Maybe. The median valuation of VC-backed companies rose 20% in the first quarter, says Venture One., to $18M. [Wall Street Journal, Jun 6].
Company Buyers Are Lurking. Ignition Partners, which has a $320 M venture fund for investing in startups, said it has gathered $80M more to support acquisitions by the companies in its portfolio ... Last year, 379 venture-backed companies were purchased for a total of $28.9 billion in the U.S., according to Dow Jones VentureOne. [Tricia Duryee, Seattle Times, Jun 2] For money to support life-style science, look to angels and government (and an equity mortgage in the house boom).
Profitability of Venture Capital Investment in Europe and the United States. This research paper from the European Commission examines the profitability of venture capital investment in Europe and the United States. It highlights the unfavorable profitability differential of European venture capital investment in comparison with the United States. The investment performance measures used are the internal rate of return and investment multiples. [SSTI, Jun 1]
For biotechnology companies, the IPO isn't what it once was. VCs and financiers say the so-called IPO window remains open. But only biotech companies with desirable, late-stage drug candidates and the right kind of deals with pharmaceutical companies will be able to sell shares to the public at high prices.
Twin Cities angel investors -- wealthy people who collectively have contributed tens of millions of dollars to [entrepreneur Doug] Pihl startups Lee Data, NetStar, RocketChips and MathStar. ... Two of his companies have sold for $300M each, and he's credited with creating numerous other Minnesota millionaires. [Steve Alexander, Minneapolis Star Tribune, May 7 http://www.startribune.com/535/story/415638.html ]
Angels Flying Again. The new angel activity is proving to be a boon for entrepreneurs ... Since February, Mr. Senkut, 36 years old, has put money into five Silicon Valley technology start-ups and has lined up several similar investments. Becoming suddenly wealthy, "at first I thought I'd have nothing to do with the Internet or high tech again," he says. "But I realized I knew nothing about retail or restaurants. I needed to come back to what I know." [Pui-Wing Tam, Wall Street Journal, May 1]
A venture-capital trade group says government regulations and other market obstacles are hindering start-up companies from going public and driving others to consider listing shares overseas. But it is unclear what kind of relief, if any, venture capitalists will get from regulators. [Rebecca Buckman and Kara Scannell, Wall Street Journal, Apr 27] the National Venture Capital Association naturally wants lots of exit routes for their infancy stage investments.
cash is still cascading into the start-up world. Palo Alto venture capital firm, Norwest Venture Partners, today becomes the latest firm to defy any emerging skepticism in the industry. It has raised $650M in fresh cash, from its sole investor Wells Fargo, to invest in technology start-ups, [siliconbeat.com, Apr 19]
And the money keeps rolling in. VCs gathered 21% more money last quarter in nine new and 42 existing funds, says NVCA.
The number of U.S. venture-backed companies staging initial public offerings in the first three months of the year rose 63 percent from 2005 levels, but the median amount raised by these companies has plummeted. According to newly released data from Dow Jones VentureOne, [John Letzing, Dow Jones Newswire, Apr 10 ]
San Francisco start-up Arch Rock got a first round VC injection of $4.5M for wireless sensor technology. No sign of SBIR money; great technologies with market potential don't need nor want government money. The founder is David Culler, a computer scientist at UC-Berkeley and former director of the Intel Research Berkeley lab. [siliconbeat.com, Mar 26]
Plenty of money sloshing around as VCs raised another $22B last year, up 19% from 2004.
Renewable Money. The VC money is chasing technologies aimed at increasing the supply of renewable energy, as well as for making existing energy plants and other infrastructure cleaner and more efficient. Venture capitalists sank nearly $181 million into alternative-energy companies last year -- nearly double the $103 million invested in that sector in 2004, according to estimates by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association. In 1995, investment in the sector was a scant $2.95 million. [Jim Carlton and Rebecca Buckman, Wall Street Journal, Feb 2]
Welcome to the latest venture capital lemming rush: investing in consumer electronics start-ups....particularly technology to allow video over home networks. .. also Gilman Louie, chief executive of the CIA's venture arm, In-Q-Tel, announced his resignation. Louie is returning to Silicon Valley, and is hooking up with former journalist and venture capitalist Stewart Alsop. The duo, who have known each other since 1986, plan to raise a $70 million fund to invest in early-stage technology companies.Louie understands technology and has experience running companies, while Alsop is ``probably the best networking gadfly in the marketplace,'' Louie said. ``He knows everybody.'' [Matt Marshall, San Jose Mercury News, Jan 6 http://www.mercurynews.com/mld/mercurynews/business/columnists/matt_marshall/13563241.htm ]
The first time Scott Shickler went to a gathering of "angel" investors, he came home with a stack of business cards from lawyers, accountants and others -- and no investors. ... finding and winning over local investors willing to put anywhere from a few thousand to hundreds of thousands of dollars into a start-up can be tricky and time-consuming. .. According to estimates from the Durham, N.H., center, angels invested $11 billion in start-ups in the U.S. in the first half of 2005 and $22.5 billion in all of 2004. Of the 2005 investments, about 20% went into health-care services, medical devices and equipment, and most of the rest went to technology-related fields such as biotech and software. [Aja Carmichael, Wall Street Journal, Jan 30 http://online.wsj.com/article/SB113825026006856795.html?mod=todays_us_the_journal_report ]
Valley Boom, Valley Bust. interesting graphic, though, from the National Venture Capital Association today (below). It shows how prone Silicon Valley is to boom and bust. Look at the venture capital profits. They're much higher than the rest of the market (see S&P) when things are good, and losses are deeper when things are bad. [www.siliconbeat.com, Jan 31]
DOD would call it "relevance". Applied Materials will bring its VC arm back in-house from life as an independent venture so it can be more aligned with Applied's strategic direction," said J. Christopher Moran, general manager at Applied Ventures. The $25M fund will go for American, Chinese, and Indian ventures. [story from Donna Fuscaldo, Wall Street Journal, Jan 23]
VCs put $22B last year into U.S. companies last year, more than any year since 2001. Get yourself a credible competitive advantage and a story. No, the usual pabulum called "Commercialization Strategy" in SBIR proposals won't do. If your story anywhere says "assuming we can get x% of the television market", you need a new story.
Lightspeed Venture Partners said it has finished raising $475 million to invest in new companies. ..it plans to invest directly into companies in China and Israel. So it is a sign of the times. Everyone is investing abroad. [Siliconbeat.com, Jan 11]
Guy Kawasaki, founder of Garage Technologies, a Silicon Valley venture firm that invests in early-stage start-ups, has launched a blog. Garage used to consult for start-up companies, helping them do things like raise cash, but more recently became a full-fledged seed-stage venture firm. Kawasaki recently wrote the book The Art of the Start, a good primer for those wanting to start their own company and have no idea how to write a business plan, pitch their company or put a team together. [siliconbeat.com, Jan 11, 06] One advice from Guy: Think digital, act analog. Thinking digital means that companies should use all the digital tools at its disposal--computers, web sites, instruments, whatever--to create great products. But companies should act analog--that is, they must remember that the purpose of innovation is not cool products and cool technologies but happy people. Happy people is a decidedly analog goal.