Below is an excerpt from the article, Venture Capital Returns Rebound: VC firms enjoyed their best quarter since 2006, but companies may continue to have difficulty securing venture funding, by Alix Stuart of CFO.com. From everything I’m reading and in talking to companies I know that are seeking venture capital, the venture capital market is steadily improving. As with all news articles, this article has a hint of negativity. That is not included in my excerpt but in the article as a whole. Given that 2008 and 2009 were recession years, I’d say what happened in 2010 and is happening in 2011 is excellent news. When VC firms can exit their investment AND do so with a good return, they are more willing to invest, which makes the improving market returns for VCs great news for applicable small and medium business (SMB) owners.
” According to figures released Wednesday by the National Venture Capital Association (NVCA) and Cambridge Associates, returns for venture funds showed sharp improvement in the last quarter of 2010 (the most recent period for which data is available) and for 2010 as a whole.
Fourth-quarter returns were 8.4%, up from 3.7% for the previous quarter and the highest for any quarter since 2006. One-year returns were 13.53%, mostly driven by higher returns (28.16%) for later-stage firms. That compares with an average 3% return in 2009 and a 20.9% average loss in 2008.
“We typically discount the one-year numbers, but for 2010, the data is actually starting to show the positive impact of an IPO market that is better — not great, but better — and a better acquisition market as well,” says Mark Heesen, chairman of the NVCA.”