As seen in the graph below, the sources of liquidity
for venture backed companies have undergone a significant transition from the IPO market to M&A over the last three decades.
Exit events today
for venture backed companies are no longer IPO's and their typically $ 150 million plus exit values.
EqualLogic is the largest all cash acquisition
for a venture backed company, according to VentureSource, and the sale resulted in proceeds of $ 195 million to TD Capital Ventures for a 22x gross investment multiple on the fund's $ 8.9 million investment.
Not exact matches
-- Daniel Putterman, cofounder, co-CEO, and head of business
for Kogniz, Inc. which recently released AICam, fully - autonomous surveillance cameras with artificial intelligence that identify people and threats in real - time, using video - based facial recognition and object detection; also having founded and run
venture -
backed technology
companies over the last 20 years including MaxInfo, Inc. (acquired by NETM), EoExchange (S - 1), Mediabolic, Inc. (acquired by ROVI), and Cloud Engines, Inc..
The firm will
back companies developing technologies
for industrial use, rather than the consumer and business software pursued by most
venture capitalists.
No
venture -
backed companies successfully sold to an acquirer or held an initial public offering
for $ 1 billion or more.
That point isn't lost on Steve Roberson, the co-founder and technical lead of Start - Up Hire, a new job site
for venture capital -
backed companies.
Venture -
backed companies in Silicon Valley pay up
for talent, not because they want to but because they know they are worth it.
Corporate
venture - capital firms that benefit from high cash flows might be willing to spread out their investments over a few similar
companies and take a
back seat in terms of driving their growth, while a
venture - capital firm is typically motivated to take a more focused and hands - on approach
for its portfolio
companies.
Though obviously helpful, the move was considered unusual
for a growing,
venture -
backed technology
company.
But
for venture -
backed security
companies that have yet to differentiate themselves and show a working business model, 2016 could be the end of the line.
More significantly, however, over 50 percent of
venture -
backed IPO exits went to health - care
companies in the second quarter, the fifth consecutive quarter that health - care
companies have topped technology
companies for public exits, CB Insights reports.
It's the latest in a relentless parade of damaging news
for the Silicon Valley upstart, which was valued last year at $ 9 billion, the most of any
venture -
backed company working in health care today.
The decline in the startup rate hasn't cut the rate of formation of two categories of
companies with very high potential
for wealth creation and job creation: angel and
venture - capital -
backed businesses.
«It stands to reason the eight schools in the official Ivy League account
for 10.7 percent of total capital raised and 7 percent of
companies - talking undergrad numbers here - to get at least a first round of
venture financing, as pedigree accounts
for a lot when it comes to
backing a first - time entrepreneur,» he wrote.
As
for his dreams of starting a
company, Fiance realizes now after a year of fundraising that he wants the House Fund to harken
back to the old days of
venture capital when the emphasis was less on the capital.
Facebook has taken that approach
for several years, snapping up
venture -
backed companies Instagram, WhatsApp and Oculus.
«With Steve's passing, Bezos is the epitome of the
venture -
backed CEO,» says Bill Gurley, another VC and longtime Amazon watcher, as well as the lead investment - banking research analyst
for the
company's 1997 IPO.
Profits are heavily reinvested
back into the
company, though Grant was still able to take a salary of around $ 150,000 when he was working
for the
venture full time.
According to a 2011 study by the National Foundation
for American Policy, the most common country of origin
for an immigrant founder of a top - 50
venture -
backed company was India, followed by Israel, Canada, and then Iran.
Perth inventor and entrepreneur Steven Goh has bounced
back from his troubles at online stockbroking firm Sanford Ltd by attracting $ US10 million ($ A12.5 million) in
venture capital funding
for his new technology
company and emerging from bankruptcy.
• Following two lackluster years
for IPOs, we should see the «unicorn backlog» of more than 200
venture -
backed private
companies start to clear out in 2018.
«On the IPO side, favorable public market conditions and stronger valuations are contributing to better quality IPOs
for venture -
backed companies as evidenced by the jump in dollars raised on the public markets,» NVCA Head of Research John Taylor said in a statement.
The fact that you are more likely to fail is a fact of life
for venture -
backed companies, it is not an expectation
for the VCs making the investment.
Already - successful entrepreneurs were far more likely to succeed again: their success rate
for later
venture -
backed companies was 34 percent.
Two years later, Camp, Smith, and a group of
venture capital firms, including Accel Partners and First Round Capital, bought the
company back for a reported $ 29 million.
Along with her role at Icon, Debby takes on consulting assignments
for a variety of well - regarded
venture -
backed companies, often serving as interim VP of Engineering until a replacement can be found with her help.
Todd Gitlin of Safire Partners was nice enough to compile some data on Start CTO Salary and Equity at
Venture Backed Companies for the LA CTO Forum and present last year.
He started an online textbook retail
company while in college, served as the CFO
for an electric vehicle startup, Lit Motors, and worked
for Innovation Endeavors, a seed stage
venture fund
backed by Eric Schmidt.
A healthy IPO market and the prevalence of large growth rounds
for private,
venture -
backed companies at lofty valuations have signaled a renewed interest in
venture capital within the LP community.
While according to Thomson Reuters there have been on average 1,582 technology
companies founded annually during the period between 2003 through 2013 (17,412 cumulatively over the period), an average of only 54
venture -
backed companies went public during this period (596 in total)-- and the median valuation
for all such IPOs was $ 354 mm.
Despite recent hype around a handful of
venture -
backed companies raising money at multi-billion dollar valuations, achieving a more than $ 1b exit
for a startup is highly unlikely.
Not only are IPOs
for venture -
backed companies extremely rare, but they also do not guarantee a $ 1 billion valuation.
However, should there be an improvement in the IPO market
for venture -
backed companies over the next decade that would be «gravy on top»
for the smaller end of the
venture capital market further improving an already compelling return opportunity.
If this strong correlation continues, exit opportunities
for venture -
backed IT
companies would as a result decline in a weak economy.
While the decline in IPO transactions
for venture -
backed companies in the 2000s is dramatic, the rise in M&A transactions has more than offset the losses such that there is a healthy trend line of positive exits over the three decades.
Over the last ten years, it has become clear that exit opportunities
for venture -
backed portfolio
companies correlate strongly with the state of the economy and its ability to support M&A and IPO market activity.
To put this number in perspective, it's more than the 12 million people the
venture capital community claims works
for U.S.
venture backed companies (which includes firms like Fed Ex, Microsoft, Google, Starbucks, etc.).
Nevertheless, the implications
for the
venture market are clear: M&A is the most likely exit market
for successful
venture backed companies today.
White Paper by Roland Reynolds & Ken Wallace September 2009 INTRODUCTION Two key trends have dramatically altered the
venture capital industry over the last three decades: the rise of larger fund sizes and the decline of Initial Public Offerings (IPOs) as an exit market
for venture -
backed companies.
The Bessemer
Venture Partners -
backed company set a price range from $ 12 to $ 14
for 10 million Class A shares in a regulatory filing Monday, seeking to raise as much as $ 140 million at the high end of the range.
Aaron Bird is the full - stack CEO at Bizible, a
venture -
backed startup that makes marketing measurement and planning software
for B2B
companies.
Although success now makes these investments seem blandly sensible, even obvious, the industries and
companies backed by
venture were actually extraordinarily ambitious
for their eras.
Suppose,
for simple analysis purposes, that only
venture -
backed companies sell
for at least $ 100M + (not true but it's even more rare
for a bootstrapped
company to sell
for $ 100M + compared to a
venture -
backed company).
In 2015, we closed transactions
for roughly 500 clients in more than 50
venture -
backed, private
companies.
As a matter of fact, our internal data shows that revenue multiplies are actually declining
for many U.S.
venture -
backed technology
companies with revenues under $ 100M.
Companies like Uber and Lyft are based in Silicon Valley and
backed with significant amounts of
venture capital, and
for the most part there is little indication that they will go public anytime soon.
As an entrepreneur, Theresia was founding VP of Business Development & Sales at Release Software, a
venture -
backed company that provided SaaS to enable digital rights management and payment technologies
for the software industry.
Two
companies backed by
venture capital have been recent buyers: Halifax Media Group (buyer of the Worcester Telegram & Gazette and a couple of others since its purchase of the New York Times
Company's Regional Newspaper Group in 2012) and the new Gatehouse / New Media (recent buyer of the Providence Journal), which has announced a $ 150 - $ 300 million war chest for newspaper company pur
Company's Regional Newspaper Group in 2012) and the new Gatehouse / New Media (recent buyer of the Providence Journal), which has announced a $ 150 - $ 300 million war chest
for newspaper
company pur
company purchases.
The result was term sheets that were so complex even good lawyers couldn't fully understand what they really meant unless they had been practicing in the specific area, and sitting on
venture backed company boards,
for many years.