"Thus, now we are facing a “nuclear winter” (!) where thousands of companies will go out of business."
— Crappy Startups Can’t Raise More Money
"The decline in funding for Seed/Early stage companies is firmly in place — we’ve seen a drop in dollars and deals both quarter-over-quarter and year-over-year"
— Told you we weren’t in a bubble: Venture capital off significantly in 2012
"Median valuations for seed financings in 2011 reached $2.9 million, more than 60% higher than the previous year and the highest total since the dot-com frenzy of 2001, according to industry tracker Dow Jones VentureSource, a unit of Wall Street Journal owner News Corp."
Venture capital investment figures are rolling in for the most recent quarter - and many folks are excited about it. Venturebeat just published a slew of recent deals:Venture Capital Makes it Rain.
BUT DON’T GET EXCITED. SPECIFICALLY, DON’T POINT TO THE THE 37% INCREASE OVER Q1 — IT’S NOT “IMPRESSIVE” (AS ONE AUTHOR CLAIMS).
Q1 WAS A TERRIBLE QUARTER. THAT HAS TO BE ACCOUNTED FOR.
WHAT’S THE MOST IMPORTANT NUMBER NOT REPORTED IN THE NEWS? THE FIRST HALF OF 2012 PRODUCED 8% LESS FUNDING THAN THE FIRST HALF OF 2011.
MORE PRECISELY, THE FIRST HALF OF 2012 HAD $1.2 BILLION LESS VC INVESTMENT THAN THE SAME PERIOD IN 2011.
Q1 2011: 7.5 Q2 2011: 7.7 Q1+Q2 = 15.2
Q1 2012: 5.9 Q2 2012: 8.1 Q1+Q2 = 14
BUT WAIT, THERE’S MORE!
VCs AREN’T THE ONLY ONES HAVING A BAD 2012:
"Corporate deals are going increasingly to later-stage startups and tend to be higher in value, which indicates that corporate venture capital firms are taking fewer risks."
— New York No. 3 in corporate venture capital
HERE’S THE TRUTH:
FIRST QUARTER 2012 WAS THE LOWEST QUARTER FOR VC DEALS IN THE LAST 5 QUARTERS — SO A GROWTH RATE OF 16% OVER FIRST QUARTER IS MOSTLY A SIGH OF RELIEF — NOT A CAUSE TO BE EXCITED AND OPTIMISTIC FOR THE FUTURE.
AND HERE’S THE REAL “GOTCHYA!” VC FUNDING FELL IN CHINA. THAT’S RIGHT. IF YOU’VE BEEN READING THIS TUMBLR, YOU’RE PROBABLY ASKING YOURSELF, HOW MANY MORE SIGNS OF A DOWNTURN IN CHINA DO WE NEED BEFORE EVERYONE REALIZES “OH CRAP, WE’VE GOT A SECOND DIP ON THE WAY!”
BUT IF YOU DON’T WANT TO HEAR ANY OF THAT, READ MORE HYPE AT: Venture Deal Making Rises In The US, Europe and India, But Slips In China During 2Q
"The bad performance of the Facebook IPO will hurt the funding market for earlier stage startups. No one knows yet how much. Possibly only a little. Possibly a lot, if it becomes a vicious circle."
— Paul Graham, cofounder of Y Combinator, Silicon Valley startup incubator
"The problem with many accelerators right now is that they’re not focused primarily on education or making money as the output/result. Instead, they’re focused on “community building” – particularly in non-startup hubs. I see this as a mistake, because you can’t manufacture communities this way; you need to focus on building successful (and big!) companies that exit, and return some of the cash and know-how back into the ecosystem."
"Suddenly everyone believes that the answer is in accelerators, and we have no [long-term data] to support it,"
— Lesa Mitchell, vice president of advancing innovation at the Ewing Marion Kauffman Foundation, an entrepreneurship advocacy organization in Kansas City, Mo.
(Source: The Wall Street Journal)
"YOU’VE GOT TO BE CAREFUL NOT TO CONFUSE GROWTH WITH VALUE."
"Last year, Accel raised $2.8 billion in fresh capital, while the broader industry contracted. Venture firms started 76 funds last year, the lowest number in 17 years, according to the National Venture Capital Association."
"On a whole, there are very few high tech models that lend themselves to successful (long-term) bootstrapping in today’s highly competitive market. “The best companies use funding to scale rapidly and own the market,” he says, “it’s not a tradeoff."