Archive for January 16th, 2012

“Profit” is a dirty word. Profit-seeking businessmen are stock villains in Hollywood movies. “Occupy Wall Street” protestors demand, “People not profits” (whatever that means). Companies reporting healthy profits are automatically assumed to be exploiting customers and can only atone for this by “giving back” to their communities. “Making a profit” has an unsavory, morally suspect taint.
Yet simultaneously, Americans have a far more positive view of the concept of “creating value.” The mainstream press lauds visionary businessmen who…

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2011 was a bleak year for venture capital fundraising in Europe and only a little better in the US. According to Dow Jones stats in Europe last year 41 funds raised $3bn, a 20% decline in the number of funds that raised capital and an 11% decline in capital raised compared with 2010. Q4 was the best quarter of the year at $991m.

At $16.2bn funds in the US raised 5.1 times as much money as funds in Europe. That was spread across 135 funds and as you can see from the chart below was more or less the same as 2009 and 2010.

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From these year on year charts it is also looks like the US market has stabilised at roughly half of the 2008 levels whilst Europe is still in decline. 2008 was a peak year for venture capital exits before the financial crisis slowed things down.

Looking at the types of funds that raised money last year it is clear that the trend towards both early stage and late stage funds and away from multi-stage funds is in full swing. One surprise for me in this data is that in a declining overall market capital committed to European early stage funds rose by 23%. Support from governments investing directly into funds or providing tax incentives for high net worths to do so may well have been a significant factor in this increase – largely government backed early stage High-Tech Grunderfonds accounted for circa 20% of the early stage funds raised.

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