Comments on: VC Funding Continues Nosedive: May Hit Bottom and Start Digging

By: VC Funding Heading Back to Pre-Bubble Levels

VC Funding Heading Back to Pre-Bubble Levels — Tue, 21 Jul 2009 05:27:27 +0000

[...] decrease in fundings during the first half of the year are a sign of a dismal exit environment and the economic malaise, [...]

By: Tech Newz » VC Valuations: What Went Up Has Come Down

Tech Newz » VC Valuations: What Went Up Has Come Down — Tue, 07 Jul 2009 21:20:59 +0000

[...] data points to what we already know — the irrational exuberance appears to be leaking out of the venture industry as exits stay scarce and returns stagnate. Basically, a whole lot of [...]

By: VC Valuations: What Went Up Has Come Down

VC Valuations: What Went Up Has Come Down — Tue, 07 Jul 2009 20:27:46 +0000

[...] data points to what we already know — the irrational exuberance appears to be leaking out of the venture industry as exits stay scarce and returns stagnate. Basically, a whole lot of [...]

By: Venture Capital Funding Disappearing — Will It Come Back? « SiferZ.com

Fri, 24 Apr 2009 01:13:47 +0000

[...] everyone is so sure. From GigaOm: “Some have argued that venture firms should be pouring between $10 billion and $15 billion [...]

By: Shai Berger

Shai Berger — Thu, 23 Apr 2009 15:51:24 +0000

I just saw data that indicates Web 2.0 investments have actually quite been quite healthy so far this year.

If you strip out Clean Tech, Biotech and hardware investments, Research Capital Corp indicates that hardly any drop in investment activity at all. More here: http://www.shaiberger.com/?p=216.

By: Is VC investment plummeting? Yes, but it’s not as bad as it looks at Call the Cloud

Thu, 23 Apr 2009 15:47:13 +0000

[...] that money available for early stage deals is disappearing the fastest. Stacey Higginbotham writes: "…it’s looking especially bad for early-stage companies, with only $900 million [...]

By: Venture Capital Funding Disappearing — Will It Come Back? | abelcreative.com

Mon, 20 Apr 2009 16:53:48 +0000

[...] everyone is so sure. From GigaOm: Some have argued that venture firms should be pouring between $10 billion and $15 billion into [...]

By: James Gardiner

James Gardiner — Mon, 20 Apr 2009 12:20:52 +0000

I find this to more of an issue with the unrealistic environment that the VC’s have created over the Web2 era.
Apart from a few winners like Amazon, Google, ebay from the early web2 days, all that is left is to get purchased by some one as an exit. Well, its either been done by now, or the free, free, free and every Free user = value.. models is just not work. There is simply no RETURN in the environment created by this FREE money for a popular but not profitable idea.
The market has turned into nothing my a sentiment driven gambling device that makes those in the inner circle, spinning this dribble, the only real winners. And right now, they cannot even flip it.. So its all stopping. Dead!!

Maybe re can get some reality into the VC equation. Building a profitable business is the basics here, not flipping it when you reach the peek of the hype you can build on it. There is a bubble here, its just not the type that pops.

James

By: fred wilson

fred wilson — Sun, 19 Apr 2009 12:58:48 +0000

stacey, my take on the first quarter numbers is here

http://bit.ly/pQyOb

By: edunetsys

edunetsys — Sun, 19 Apr 2009 09:23:03 +0000

This confirms that VC funding is linked to state of economy and not the “Brilliant Ideas”. VCs also turn miserly depending upon the state of economy.

By: John

John — Sat, 18 Apr 2009 08:27:08 +0000

This is hardly a surprise. What is a surprise is that early angel and first round funds are available at all! These guys are not investing in the long haul, they have a specific market function to get in early, and out early – either cutting the investment loose because it’s a poor bet, or cashing in with an IPO. They do not have a business plan that includes hanging on to a company for 7-15 years for the market to realize it’s true value.

The real problem is that a good well positioned startup needs a viable mid-volume market about 3-4 years from funding, which should match a market peak for the IPO. Market cycles are typically about 10 years for techs … where we have seen the downs in the early 70′s, 80′s, 90′s, including the beginning of this decade when things crashed around 2001. The boom part of that cycle is typically 7-8 years after the previous bottom, which is where IPO’s perform the best. When you reach back into the 50′s and 60′s, we see similar post war cycles in the development and marketing of household appliances, that tell us a lot about what the new product introduction cycle looks like, from early adopters, to mass production which leads to early market saturation. With radios, TV’s, Microwaves, Cameras, blenders, vacuums, which continued into the computer and portable gadget markets.

There are two thoughts about the 2000 decade cycle … we never had a strong boom cycle for techs this decade, and this bust cycle came several years early. With the next boom cycle naturally positioned 6-7 years out, the VC’s are stuck holding properties that should have been peaking right now. The next good investment cycle is still 2-3 years away, so that investments will have 3-4 years to development their market, and position for IPO with the next boom cycle that is likely to be late in the middle of the next decade.

I’ve given a talk about the nature of consumer tech markets, and the 10 year cycle regularly since the 1982 bottom that caught computer start-ups completely off guard to due poor market forecasting. The most interesting change in 25 years is globalization, and how poorly US companies have positioned themselves for markets later this century. Jobs go where the manufacturing is … including the R&D jobs.

Which is probably why the 2008-2009 boom cycle never appeared, fizzling out early this decade.

What creates boom markets is the secret that most people never figured out.