Although warming up a bit, the venture capital market is no where near the scalding hot level of activity of a few years ago. This site gives a good analysis of the state of the venture capital world today.
Here are a few highlights:
–Prudence seems to be the watchword for venture capital investing in 2004. From the VC’s I talk with, there is a more realistic view on their expected rate of return from investments to go along with their more prudent risk taking. This is indeed a good thing, as it may begin to open up more deals for businesses that could not meet the unbelievable expected returns of a few years ago.
-However, supply and demand may be a factor that pushes expected returns up a bit. Since the economy is heating up, there are more deals being created, which where can i buy topamax online means there will be more demand for venture funding. Unfortunately for entrepreneurs looking for VC funding, investment in venture funds has been sluggish of late, so supply of money is down. Demand up, supply down leads to higher prices, or in this case higher expected returns from the VC’s.
-Finally, IPO’s are up. This should, over time, increase interest by large investors in putting money into VC funds. More IPO’s means more liquidity and better real returns in the deal market which is a good thing for anyone investing in a venture fund. So by the end of 2004 or into 2005 we should see a better venture capital market for the entrepreneur due to more money flowing into venture funds. Supply and demand at work again!
Thanks to the National Dialogue on Entrepreneurship for passing along this information.