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State of Venture Capital
Howard Lindzon
October 07, 2018
I collected a few articles that should give you a good 10,000 foot feel of the state of the Venture Capital Industry right now.
Money has been pouring in. Eric Feng of Kleiner Perkins has a stats-based look behind the venture capital curtain
In the past 15 years, the amount of money invested by US-based VC firms into startups grew more than 4x to almost $85 billion dollars last year. Before 2011, an average of $28 billion was deployed each year but in the past 7 years, that number has jumped to $62 billion invested annually. Not surprisingly the number of deals has seen a corresponding sharp increase. From 2003 to 2010, the industry averaged almost 3,800 investment deals per year. But since 2011, the average number of deals per year has shot up to more than 8,700.
When you look at the dollar amounts deployed, venture and growth stage deals (i.e. non seed deals) have accounted for over 90% of the capital and that ratio has been consistent over the past decade. So even with the sharp influx of seed funds, the vast majority of the dollars are still invested by traditional venture and growth funds.
Despite the massive amount of dollars flowing through the US Venture Capital markets, The U.S. share of global venture capital fell more than 20% in 5 years.
It took a while, but the Venture Capitalists and the institutions that fund them, are getting what they needed and that is IPO’s. Profitability be damned once again though so maybe it’s buyer beware time? Over 80% of 2018 IPOs are unprofitable, setting a new record.
The circle of venture capital life continues, it’s just more global.
I think more dollars for more founders is just a good thing overall, but I am sure each of us can and will read the data differently. Have at it.
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