National Association of Seed and Venture Funds
| The Biggest Year in Venture Capital Since 2001 |
01/21/2008
Preview:
It’s the largest number in six years as both the PricewaterhouseCoopers/ NVCA/Thomson Financial Money Tree and the Dow Jones/Ernst & Young VentureSource agree that institutional venture capitalists invested about $29 ½ billion in more than 3,000 US companies in 2007.
Article:
It’s the largest number in six years as both the PricewaterhouseCoopers/ NVCA/Thomson Financial Money Tree and the Dow Jones Ernst & Young's VentureSource agree that institutional venture capitalists invested about $29 ½ billion in more than 3,000 US companies in 2007.
Competition between the number crunchers will likely result in some minor adjustments as tardy data reaches their spread sheets.None the less, there is no question that it’s the most aggressive year since the bubble was punctured in 2001.
Money Tree reported $29.4 billion in 3,818 deals, and VentureSource identified $29.9 billion in 2,648 deals.
NetNews has been tracking the Money Tree for years and they’ve been kind enough to carve out some state-by-state data for our readership, the majority of whom labor diligently in seeking innovation capital for worthy entrepreneurs in what David Wilhelm branded ‘The Fly-Over States’ some years ago. These are the states where a scarcity of start-up capital often drives their entrepreneurs to seek other climes.
Not much change from quarter to quarter or year to year. California and Massachusetts continue to be at the hub as the wheels grind on. In 2007 California retained its runaway leadership position accounting for 47% of the dollars into 41% of the companies. Boston environs, in addition to playing host to the Red Sox, Patriots and Celtics, is also home to 11% of the companies who attracted 12% of the dollars invested.
Others in the top ten, in 2007 order, are New York (5%), Washington (4.5%), Texas (4.4%), Pennsylvania (3.9%), Maryland 2.6%), New Jersey (2.4%), and Colorado and Virginia, each with 2.3%. States recording a goose egg for the year also fit the same ol’ same ol’ pattern. They include Alaska, Arkansas, Montana, North Dakota, Nebraska and Wyoming, although some of these would show up if we carried the decimal fraction out a little further or the process reached down to record small, local funds. It's worth remembering, at this juncture, that the survey data is largely compiled via voluntary information submitted by the venture capital firms and confirmed by the collection centers. Some of the fly-over states obtain some venture capital from non-reporting, smaller local venture firms and state sponsored programs.
Still, with Massachusetts and California controlling 59% of the money and 52% of the companies obtaining venture-funding, that doesn’t leave much for the other 48 states to share.
The pattern for how venture funds are invested also remains consistent. Start-up firms attracted just shy of 4% of the money, but they account for 11% of the number of companies in which venture capitalists placed their largess. Early stage companies, i.e., those that have products in the marketplace and management teams in place account for 26% of the companies and attracted 17% of the money. Expansion and later stage firms captured the remaining 78% of the money. The light at the end of the tunnel for the start-up entrepreneurs is that the 4% is an upward inclination from recent years.
Here are the state-by-state numbers for 2007, generously put together for NASVF by PricewaterhouseCoopers, the National Venture Capital Association and Thomson Financial.
