w**z
发帖数: 8232 | 1 http://www.businessinsider.com/r-silicon-valley-venture-capital
By Heather Somerville
SAN FRANCISCO (Reuters) - Venture capitalists are raising money at the
fastest rate in a decade, raking in about $13 billion in the first quarter
of 2016.
But much of that cash won't flow into new startups anytime soon. Rather,
venture firms are bracing for a downturn and boosting reserves to keep
companies they have already backed from going bust, said venture capitalists
and limited partners.
"They are squirrels trying to pack their cheeks full of nuts," said Ben
Narasin, a partner at Canvas Ventures. "Everyone has been waiting for winter
to start for a long time."
The paradox of rising venture fundraising and falling venture investing is
the latest sign of a tectonic shift in the tech startup realm. The
extraordinary growth of so-called "unicorn" companies such as Uber and
Airbnb – now valued at tens of billions of dollars, based on venture
investments – has left many high-value startups with no "exit strategy," in
Silicon Valley parlance.
Burned by previous busts, Wall Street has lost its appetite for initial
public offerings from money-losing companies. No venture-backed tech startup
has gone public this year, and the few that did last year - including
enterprise storage company Pure Storage, and cloud storage and file-sharing
firm Box - have seen their share prices steadily sink. High valuations have
also scared off potential acquirers.
Scale Venture Partners exemplifies the cautious approach taking hold in the
VC industry. It chose to do one fewer investment from its last fundraising
round and to increase its reserves by more than 10 percent.
"We will have to support our companies longer," said Rory O'Driscoll, a
partner at the firm, which raised a $335 million fund in January.
Accel Partners has reduced its pace of new investments since the middle of
last year, while increasing its follow-on funding for portfolio companies,
according to an analysis by venture capital database CB Insights.
The venture firm raised $2 billion in March, but it won't tap into the new
fund until late fall, said managing director Richard Wong.
Total U.S. venture investment fell to $12.1 billion in the first quarter -
down 30 percent from the most recent peak of $17.3 billion in the second
quarter of last year.
Chris Douvos, managing director of Venture Investment Associates, an
investor in early-stage venture funds, says the funds he backs are
increasing their reserves by 10 percent to 25 percent over what they had in
previous funds.
The $13 billion raised by VCs is the third-largest quarter for fundraising
since the dot-com peak in 2000, according to Thomson Reuters data. There is
now $382 billion of dry powder - cash available to spend - held by both
venture capital and private equity firms that invest in technology companies
, according to investment banking and consulting firm Bulger Partners.
"It's fast, and it's a lot of dollars this year," said Beezer Clarkson,
managing director at Sapphire Ventures, which invests in early-stage venture
funds.
Many VCs believe that more reserves will be needed for the big cash
infusions that startups often need after establishing themselves but before
turning a profit.
VCs are also seeing mutual funds retreat from late-stage startup financing
deals. Mutual funds led just eight deals in the fourth quarter of last year,
down from 26 in the second quarter, according to the research firm CB
Insights.
The confluence of trends means that money-losing startups likely will
struggle more for venture capital. That, in turn, could lead to more
companies failing or cutting staff, cooling the red-hot market for tech
talent. It could also strengthen the hand of dominant tech companies, who
may face fewer disruptive rivals and attract employees tired of volatile
startup life, according to tech recruiters.
CASH BURN
Until recently, many venture capitalists have had a land-grab mentality,
even with more obscure startups such as Magic Leap - an augmented reality
company that raised about $800 million in February - or Social Finance, a
startup in the highly scrutinized fintech sector that raised $1 billion in
September.
Investors competed fiercely to finance hot companies they believed could be
the next Google or Facebook. Higher prices for smaller stakes drove up
valuations in companies, including many who burned cash quickly in a quest
for growth. Many venture capitalists say they overpaid by 20 to 30 percent,
and now have to keep those companies afloat.
Over the past six months, however, nervous whispers about a tech bubble have
sparked rising skepticism of venture-dependent startups with stratospheric
price tags.
The same venture capitalists who jousted in bidding wars for the next great
deal just six months ago are now fending off appeals.
Canvas Ventures, Norwest Venture Partners and Accel Partners - among Silicon
Valley's more prominent firms - say they are getting more calls from peers
asking them to join a late-stage round for companies running out of cash.
"We get a lot more 'special opportunities, just for you,'" said Wong, of
Accel Partners. "We get the phone calls, along with everyone else."
PAPER GAINS
For now, venture capitalists have little problem raising money, despite
their new hesitance to spend it and the inability of many startups to turn
profits or go public.
That's in part because many VC firms are currently showing huge paper gains
in the value of their portfolios. Many firms are raising as much as possible
now, in case valuations drop in so-called "down rounds," when later stage
investors pay less for company stakes than earlier ones, and the returns on
their investments plummet, according to limited partners.
Signs of falling returns are already emerging. Cambridge Associates, an
investment advisor, measured a -0.4 percent return on the U.S. Venture
Capital Index for the third quarter of last year, the first down quarter
since 2011.
First Round Capital, an early-stage venture firm, warned its limited
partners in a letter a year ago that the seed-stage venture capital deals
will see much lower returns in the next several years.
But that warning didn't scare Douvos, an investor in First Round, which was
an early backer of Uber and made a bundle on the IPOs of Square and OnDeck
Capital.
"Fund performance will soften," Douvos said. But, he said, "The returns from
First Round are so good that nothing else really matters."
(Reporting by Heather Somerville; Editing by Jonathan Weber and Brian
Thevenot) | j*******l
发帖数: 1066 | |
|
