Venture Capital News

Africa: Venture Capitalists Seek More Investment in Africa

2012-03-31T18:57:00.000+03:00

The African Venture Capital Association (AVCA) has said it is working assiduously towards improving the level of investment in the continent.

Chief Executive Officer, AVCA, Mitchelle Essome, who said at a media briefing in Lagos on the association's forthcoming 9th annual African private equity and venture capital conference titled: "Africa, the Rising Giant,"

emphasised that Africa needed sufficient investment that would propel its growth and also to enable it compete favourable with others continents.

Venture capitalists are firms that invest business ventures by providing capital for start-up or expansion. Venture capitalists are professional investors that manage funds and are looking for suitable investments for such funds.

Essome said that the total value of the venture capital industry in Africa was between $60 and $70 billion.

She also stressed that the investor base of the continent could be improved through education.

According to her, the pension assets in Africa have recorded tremendous growth, adding that there is need to build capacity in the industry on how to invest such effectively.

Commenting on the conference which holds in Accra, between 22 and 24th April, Essome added: "What we have succeeded in doing is to attract a lot of investors from the United States. About 60 different investors that are attending the conference from different countries, manage a total of $280 billion. We hope to use the conference to showcase the investment opportunities in Africa.

Getting Venture Capital Back on Track

2012-03-30T17:56:00.000+03:00

Startups (JOBS) Act, a piece of bipartisan legislation initiated by House Republicans that will help right the U.S. venture capital industry. And they did it in a presidential election year no less!

To grasp the importance of this legislation, you have to be aware of the moribund state of the U.S. venture capital industry. For the past decade, the industry has been in decline. In 2010, the real dollar amount of money the industry raised from its limited partners was 44 percentof 2001 levels; the number of active venture capital funds was 63 percent; and the number deals venture capitalists undertook 73 percent .

The industry’s shrinkage has hindered U.S. economic growth and employment. Venture capital-backed companies produce 21 percent of U.S. GDP and 11 percent of employment in the private sector, despite accounting for less than 0.2 percent of all businesses, according to estimates by IMS Global Insight .

Another Outlook on Venture Capital

2009-01-16T17:10:00.000+02:00

Xconomy's Bruce Bigelow attended a panel discussion of entrepreneurs in the software industry this week, and came away with an interesting take on the state of venture capital in this horrible economy.

Last week I wrote about those who feel that the venture capital industry is at a crossroads, and may never return to its glory days of the 1990s.

Yet Bigelow's sense from the speakers at the event put on by the San Diego Software Industry Council was that the road has always been bumpy for the startup trying to make it big with the next killer app.

Venture capitalists venture opinion on how ’09 will go

2008-12-25T20:15:00.000+02:00

Philadelphia-area venture capitalists and the people they work with expect venture capital investment will drop next year, according to the results of a survey released Tuesday.

Thirty percent of 311 VCs, professional advisers and entrepreneurs surveyed at the Mid-Atlantic Capital Conference earlier this month said they expect it will decrease less than 10 percent, while 28 percent said they expect it will decrease more than 10 percent.

The survey was conducted by KPMG in conjunction with the Mid-Atlantic Capital Alliance, which held the conference in Philadelphia Dec. 2-3.

A majority, 54 percent, said they expect venture capital investment to “trend back up” in 2010. Twenty-four percent said the upswing would start next year and 19 percent said 2011.

The same majority, 54 percent, expect valuations of venture-backed companies to decline more than 10 percent in 2010. Twenty-six percent expect them to decrease less than 10 percent and 12 percent expect them to remain the same.

An even greater majority, 60 percent, expect the economy will have a significantly adverse impact on the availability of venture capital to startup or seed companies next year. Thirty-five percent expect it will have a modestly adverse impact.

SEC Charges a Venture Capitalist With Fraud

2008-12-07T08:48:00.000+02:00

SAN FRANCISCO — Federal authorities accused William Del Biaggio III, 41, a former Silicon Valley venture capitalist and part owner of the Nashville Predators hockey team, of defrauding investors and using the money to buy his $25 million stake in the professional sports team.

Skip to next paragraph

Rick E. Martin/San Jose Mercury News, via Associated Press

William Del Biaggio III in 2002; he is charged with falsifying documents.

The Securities and Exchange Commission said in a complaint filed in Federal District Court here that Mr. Del Biaggio, who is known as Boots, also used the money to pay off gambling debts and maintain a lavish lifestyle and luxury home in San Jose, Calif.

Mr. Del Biaggio faces a civil injunctive action of securities fraud by the S.E.C. Federal prosecutors filed a single criminal charge of falsifying documents to obtain $100 million in loans.

Securing Venture Capital from China

2008-11-26T14:14:00.000+02:00

First, the good news: "China does have a VC community, and…[it's a] source of liquidity and appetite for new investment, notwithstanding the current global financial collapse," says Janet Carmosky, CEO of the China Business Network, a business information and networking Web site.

Bradley Haneberg, a securities lawyer for Kaufman & Canoles who has worked on direct Chinese initial public offerings, agrees. "In the last several years, China has seen the birth and exponential growth of its entrepreneurial class. The Chinese government adopted several policies (including tax incentives) to encourage the development of privately owned businesses. These entrepreneurial ventures, coupled with the privatization of state-owned businesses, have driven the Chinese economy to new heights," he says.

Despite a blistering economy and an enormous spike in the number of businesses that require access to capital, bank debt is difficult to obtain in China because loans have traditionally been given only to companies that are politically connected. The lack of bank financing has contributed to the creation of Chinese venture capital groups, Haneberg says. Chinese investors have funded telecoms, Internet ventures, health-care firms, software development, green tech, water projects, airport securities, and social networking sites, says Robert Chen, executive vice-president and general manager of the ChinaTel Group, which provides WiMAX networks in China and other countries. "Next-generation home entertainment could be big here," he says.

SB China Venture Capital mulls RMB 2 bln hi-tech fund

2008-11-11T11:25:00.000+02:00

Nov. 11, 2008 (China Knowledge) - SB China Venture Capital (SBCVC), the investment arm of Japanese Web and telecoms group Softbank Crop in China, is engaged in raising its first RMB-denominated investment fund with an initial target size of up to RMB 2 billion, the South China Morning Post reported Tuesday, citing unnamed sources as saying.

According to the sources, SBCVC was expected to finish the fund-raising processes before the end of this year or early next year and would team up with an investment arm affiliated to the Shanghai Municipal Government to launch the fund.

The fund, to be managed by SBCVE as its general partner, will primarily focus on the fast-growing high-tech sector, especially in Shanghai's Pudong New Area, sources added.

Venture capitalists not upbeat on economy

2008-10-30T13:18:00.000+02:00

"There's been a real big change in the world, and I don't quite understand it," said John Doerr, a partner in Kleiner Perkins Caufield & Byers in Menlo Park, one of Silicon Valley's oldest and best-known venture capital firms. Doerr spoke in Palo Alto Wednesday on a panel sponsored by VentureBeat, a venture capital blog.

"All the world's global financial assets ... have declined by 40 percent - that's absurd," he said. "There's something going on here other than subprime mortgages."

Doerr said the financial meltdown has created a "crisis of confidence" in government, financial institutions, companies and money.

Venture capital seen tightening up

2008-10-19T02:45:00.000+03:00

he economic crisis is one of credit and confidence. Companies face a double whammy: traditional financing - from banks - is difficult and venture capital dispensing crucial seed money has never been abundant in Canada at the best of times.

We asked professor Stewart Thornhill, executive director of the Pierre L. Morrissette Institute for Entrepreneurship at Richard Ivey School of Business at the University of Western Ontario to answer a few questions about the venture capital markets in Canada.

Q: What's happening in the Canadian venture capital industry in the context of the current financial crisis?

NWDA begins £140m venture capital loan fund

2008-09-05T19:51:00.000+03:00

The Northwest Regional Development Agency (NWDA) has today launched its £140m venture capital loan fund, as revealed in the June 23 issue of Crain’s Manchester Business.

The agency held an event in Warrington attended by Treasury ministers Yvette Cooper MP, Jane Kennedy MP, Regional Minister Beverley Hughes and around 100 business leaders.

The £140m Venture Capital Loan Fund consists of £70m of European funding which will be used to support small and medium-size businesses unable to raise finance on the open market because its funding requirements are too small for commercial equity funders.

A £40m package to stimulate business investment in skills has also been announced and a new £10m programme has been set up to support high growth business.

Venture Capital: Clean tech industry says the future could be now

2008-08-15T21:29:00.000+03:00

More money. More government assistance. And real changes in consumer behavior.

Those were among the thoughts of four leaders from the state's clean tech industry who spoke last week at a CityClub luncheon in downtown Seattle.

Propel Biofuels founder Rob Elam, whose Seattle company is establishing biofuel stations in Washington, Oregon and California, said it is difficult to predict when new energy technologies will catch on. Part of the issue is that companies such as Propel are trying to figure out if a market even exists. Another road block is that some technologies, such as algae-based biofuels, are still very much in development.

"Some of the barriers are so large that I don't think anyone can make a clear estimate on a timeline to surmount them, but hopefully with market participation, policy incentives and a lot of private money backing these groups, the solutions will come to market sooner rather than later," Elam said. "Three to five years is what I've been hearing since 2004."

Venture capital firms face tighter exit strategies

2008-07-04T21:38:00.000+03:00

The IPO market has crimped the most, with no venture-backed firms making the leap to going public during the second quarter of 2008, according to a report from Dow Jones VentureSource and a similar study from the National Venture Capital Association and Thomson Reuters.
Combined with only five venture-backed offerings in the first quarter, the market for venture-backed IPO deals has plummeted from 43 deals in the first quarter of last year, the NVCA report found.
"The situation is concerning enough to be characterized as a capital markets crisis for the start-up community," the NVCA report read.
There also does not seem to be many deals waiting in the pipeline. As of June 30, only 42 venture-backed companies had filed IPO papers with the Securities and Exchange Commission. That number is down 40% from a three-year high of 72 companies in the registration process in the third quarter of last year.
The report from Dow Jones VentureSource added that 10 companies have pulled their IPO registration papers since the last venture-backed offering was completed in March.

4th Madrona fund raises $250 million in venture capital

2008-06-11T11:40:00.000+03:00

Seattle's Madrona Venture Group is announcing today that it closed its fourth venture fund, raising $250 million to continue investing in early-stage Northwest technology startups.

"We're going to stick to what has worked well," said managing director Matt McIlwain.

McIlwain noted that among Madrona-backed companies, four were sold and one went public in the past 18 months.

The fund exceeded its target of $225 million, with all of Madrona's existing institutional investors signing up, including the University of Washington.

Also participating are several new individual investors and institutions, including Cambridge and Oxford universities.

Washington Mutual stock rose 6.9 percent Tuesday after falling 17 percent to a 16-year low Monday.

"If you take a look at Washington Mutual, even though its mortgage business is horrible, even though it has these terrible loan losses in its portfolio that have yet to be recognized, it also has one of the strongest retail-banking businesses in the country," said Richard Bove, an analyst with Ladenburg Thalmann.

Why the venture capital model is broken

2008-05-20T23:35:00.000+03:00

Why should we care? Simply because while the 'smart money' is busy chasing huge hits, less sexy but perfectly viable ventures are getting ignored.

Consider that, on average, 4,130 companies were backed annually by VC money between 1997 and 2004, according to figures compiled by PricewaterhouseCoopers, Venture Economics and the National Venture Capital Association. If 2 per cent are 'home runs' (defined as projects with annual returns of 100 per cent and up), then we're talking about a meager 83 home runs a year.

Think about it: That means an enormous percentage of the 1,200 VC funds (even assuming some collaboration) are losing their shirts--let alone clearing those 20 pre cent hurdle rates demanded by investors to justify the risk. Indeed, the actual average return for early-stage VC funds during the 20-year periods ending between 1999 and 2005 was 17.3 per cent.

Lessons from the father of venture capital

2008-05-06T13:18:00.001+03:00

French politicians often look enviously across the Atlantic at the entrepreneurial successes of the U.S. economy, such as Google Inc., Apple Inc., Intel Corp. and Microsoft Corp. So it is a heavy irony that the man who founded the U.S. venture capital industry, helping to create many multibillion-dollar companies, came from France.

In "Creative Capital," Spencer E. Ante, a Business Week journalist, recounts the life of a 20th century Renaissance man, Georges Doriot.

Born in Paris in 1899, Doriot was the only son of a promising industrialist at the Peugeot car company and his schoolteacher wife. At age 21, Doriot sailed by steamship to the U.S. from his native France and went on to become a brigadier general in World War II, one of the most influential professors at Harvard Business School and founder of Instead, Europe's first business school.

But his main achievement was to pioneer the U.S. venture capital industry in 1946 by setting up American Research & Development, which backed one of the first blockbuster technology start-ups, Digital Equipment Corp.

Silicon Valley venture capital

2008-04-23T18:40:00.000+03:00

Kleiner Perkins Caufield & Byers is joining with another clean-technology-focused venture capital firm and a Norwegian company to bring electric cars to the USA.

The joint venture's first product will be Think City, an emissions-free, 95% recyclable car with a maximum speed of 65 miles an hour.

Plans call for a U.S. launch in 2009. The cars will be priced below $25,000.

Kleiner Perkins is teaming with Boston-based RockPort Capital Partners and electric-carmaker Think Global to create a company called Think North America.

Fewer Venture Firms Are Raising Larger Funding Rounds

2008-04-15T00:50:00.000+03:00

Fewer venture capital firms raised larger rounds of funding in the first quarter compared with the same time frame in 2006 and 2007, the National Venture Capital Association and Thomson financial reported Monday.

A total of 57 firms raised $6.26 billion compared with 83 funds and $6.21 billion in 2007 and 75 funds and $6.59 billion in 2006.

Mark Heesen, the NVCA president and a keynote speaker later this week at the Council for Entrepreneurial Development’s annual venture conference, said the need for capital is helping drive up the overall size of funds.

“The interest by venture capitalists in capital intensive industries such as life sciences and clean technologies will likely drive fund sizes upward for the foreseeable future,” Heesen said.

China venture capital investment up 12.9%

2008-04-01T23:53:00.000+03:00

BEIJING, April 1 (Xinhua) -- The 73 venture capital (VC) investment deals completed in China in the first quarter were valued at 585 million U.S. dollars, up 12.9 percent from the same period last year, said a report released on Tuesday by ChinaVenture.

The report said the number of deals completed was basically flat for the first quarter. For the same period in 2007, 72 deals were completed.

The average deal size was 8.02 million U.S. dollars, up 11.3 percent.

The medical and healthcare sectors remained the most popular among investors with seven deals completed. They were valued at 83.99 million U.S. dollars.

Since the fourth quarter of 2007, the sector has been much chased by investors while the once-popular Internet service sector has seen a shrinking number of deals.

ChinaVenture is a consulting firm that provides services for VC investors, investment banks and entrepreneurs both at home and abroad.

Biotech sector set to pull in venture capital funds

2008-03-28T23:05:00.000+02:00

Israel's biotechnology sector is poised to attract more investment from venture capital funds over the course of the year, according to an Israel Venture Capital research paper.

According to Eyal Solomon, of the Ethosia human resources firm, biotechnology in Israel has the strength to withstand any downturns in global markets.

"If we do feel the effects [of an economic downturn], it will only be seen in two quarters' time," he said. "The venture capital funds have money in the 'pipeline,' and their investors want to see results. They can't just sit on the money."

IVC expects the biotechnology sector to attract 12 percent more investment this year. Though health care organizations around the world, private and public, are increasingly trying to cut costs, there is still ample opportunity for innovative products to make money by addressing unresolved medical problems, or to make existing procedures safer, cheaper and more effective. And venture capital funds are eager to find the next big

“the often overlooked co-founder of YouTube,” has put together a venture investment group

2008-03-21T00:09:00.000+02:00

It is said that the new VC fund will be “founder friendly.” With messages being passed around the startup world concerning seemingly unfair pressures and disadvantages associated with financing terms for fledging ventures (see: thefunded), such a tag line may prove attractive to new companies looking for backing without having to sign off large percentages of stock/ownership or agree to otherwise unfavorable terms. Of course, as the old adage goes, the proof is in the pudding. We’ll have to wait and see whether Karim and partners Kevin Hartz and Keith Rabois can live up to such a claim - albeit an unofficial one.

So far, Youniversity has not registered as a VC firm with the SEC or the state of California, where it is based. A look back at the histories of Karim & Co shows the YouTube co-founder as a member of the PayPal workforce, where he associated with Chad Hurley and Steven Chen prior to launching the video site.

Venture capital is on the move — to New Mexico, Pittsburgh and points beyond

2008-03-16T10:31:00.000+02:00

A new survey shows that venture capital investment – the stuff that fuels technology innovation – is growing in parts of the country where it has been largely unapparent. The survey from the National Venture Capital Association, based on data provided by Thomson Financial, found that while Silicon Valley remains the hotbed of seed capital, other regions are seeing it grow more quickly.

In New Mexico, for instance, venture capitalists put $128 million into 21 companies in 2007, the survey found. Compared to the investments made a decade ago, that’s an increase of 600 percent in the number of companies and of 375 percent in the amount of funding.

Or take Pittsburgh, the second fastest-growing region of the country in terms of venture capital investments over the last decade. In 2007, it was home to 44 new venture-financed companies – up 267 percent from 1997 – that collectively got $198 million, an increase of 513 percent).

Seattle venture-capital activity is among the fastest growing

2008-03-11T17:47:00.000+02:00

In the world of venture capital, the Seattle area is dwarfed by the frenetic activity of Silicon Valley and Massachusetts. But the Emerald City was the third-fastest-growing U.S. investment hub of the past 10 years, according to a report by PricewaterhouseCoopers and the National Venture Capital Association.

The study, known as the MoneyTree Report, indicated local startups raised some $1.25 billion in 2007, up 211 percent since 1997.

Two other areas, New Mexico and Pittsburgh, showed even faster growth over the decade, but the level of investment they attract is far smaller than Seattle's.

"It's growing along nicely," said Chad Waite, a director with Kirkland-based OVP Venture Partners.

Venture capital firms positive despite the tightening market

2008-03-04T12:17:00.000+02:00

The managing general partner of Anthem Capital Management’s Baltimore office expects a tougher year for entrepreneurs looking for funding, but said opportunities still exist for the right ideas.

“My industry is not as directly impacted by economic upturns or downturns in the economy as others may be, but we’re hardly immune from its effects,” Gust said. “It will be increasingly difficult for private companies to raise capital.”

A survey released last month by the Mid-Atlantic Venture Association showed an uptick in fourth-quarter investments from the previous quarter, with 89 percent of regional investors closing at least one new investment, compared with 64 percent in the previous quarter and 72 percent during the same quarter in 2006.

US venture capital firm Chrysalis closes $163m fund

2008-02-28T11:13:00.000+02:00

Chrysalis Ventures has closed its fourth investment fund on $163m, exceeding its $150m target. The fund will offer equity capital to young growth companies in the Midwest and Southern US.

Chrysalis Ventures has made investments in over 55 companies in its three prior funds including Six Flags, ActaMed, High Speed Access Corporation, Tritel, Appriss and Genscape.

Based in Louisville, Kentucky, Chrysalis has $375m under management. The firm invests primarily in healthcare services and technology, media and communications and business services.

Venture Capital investments in India a record $928 Million in 2007

2008-02-23T00:37:00.001+02:00

Mumbai: Venture capitalists invested some $928 million in 80 deals for entrepreneurial companies in India during 2007, according to the Quarterly India Venture Capital Report published today by Dow Jones VentureSource.

This was a whopping 166 per cent increase over the $349 million invested in 36 deals in 2006, and easily the highest total on record for the region.

The report found nearly 48 per cent of all venture financing deals in India were for Information Technology (IT) companies, as 38 rounds were completed, accounting for $384 million, more than India's entire 2006 venture investment total.