Came across a few more tidbits since my previous post on IPOs. The first comes from Fortune’s Dan Primack who reported that “ten companies have priced U.S. IPOs so far [last] week, and each one has done so either at the bottom of their proposed price range, or below it altogether.” He thinks we’re moving into “trend” territory now.
On the flip side the latest MoneyTree report from PwC, the NVCA and Thomson Reuters reports that venture capitalists invested the most money since Q2 2001 last quarter. Overall, VCs pumped $9.5 billion into 951 U.S.-based companies last quarter, representing a 12% increase in dollars and 14% decrease in deals from Q4 2013.
The quarter included nine rounds of $100 million or more, including top raiser Dropbox ($325m). Software was the leading sector with more than $4 billion, followed by biotech (1.06b), IT services ($815m) and media/entertainment ($743m). Silicon Valley topped the pack regionally with a whopping $4.7 billion for its startups, followed by New England ($1.01b), New York Metro ($961m) and LA/Orange County ($519m).
Pitchbook has come up with a first-quarter infographic that features a few surprises. First, four funds garnered more than 50 percent of the capital raised in the first three months of this year.
The first quarter also saw the most capital invested in a single quarter in the history of venture capital. And we’ve also just seen the most IPOs in a single quarter since the fourth quarter of 2007.
In fact, according to a new report by Thomson Reuters and the NVCA, 36 venture-backed IPOs raised $3.3 billion during the first quarter of 2014, a 50 percent increase, by number of new listings, compared to the previous quarter. The first quarter also marked the fourth consecutive quarter to see 20 or more venture-backed IPOs.
Stop by a pitch competition or VC panel event and you’re guaranteed to hear questions about raising money and just how likely it is for your company to be one of the selected few.
Dave McClure advises startups to just be awesome. Marc Andreesen tells entrepreneurs to be so compelling investors can’t resist giving you money. That’s all well and good, but what are the actual odds either of these guys is going to invest in your idea/team? Tomasz Tunguz decided to crunch the numbers and find out.
First the good news – there are more companies than ever raising seed capital (4x more in the last 4 years). And while the number of companies being started has also gone up dramatically, most likely the odds of raising a seed round are much higher than they used to be (unfortunately there’s no way to quantify this as the total number of companies formed is not available).
Now for the bad news – while the total number of A rounds has gone up marginally, series B remains basically unchanged. Meaning the odds of your startup making it from seed to B have gone down from about 30% in 2006 to about 5% in 2011 (the mean for all years is 12%). Pretty brutal numbers.
So perhaps if your idea is awesome and your traction is ridiculously compelling, you may get lucky enough to successfully run this gauntlet. On the other hand, I wouldn’t worry about the numbers that much. The odds are still way better than playing Powerball.
Last week PitchBook posted an excerpt from their upcoming 2013 League Table Report which looked at 2013’s top VC investors globally (by deal count) in a selection of industries.
Not surprisingly, 500 Startups is leading a number of categories and firms from the Bay Area dominate the top of most of the lists.
Nikhil Basu Trivedi takes a look at the current trends in Series A rounds where we’re seeing both a rise in ‘mega’ A rounds ($10M+) and a crunch.
Companies with factors such as traction as exhibited by usage growth or revenue growth, or an all-star team, or an insanely compelling story are raising larger Series A rounds than in the past. But companies without such momentum are finding it harder to raise a Series A, often having to raise smaller Series A/“Seed+” rounds, or bridge rounds, or facing the reality of having to shut down.
You can read the full article here.