VCs forced to wait longer to see returns in most industries |
Connect with TechFlash on our Facebook page for all the latest technology news headlines and commentary, plus information and access to special events, photos from events, promotions and more.
Today On Techflash
- Can Microsoft overcome the smartphone app gap?
- Hey recruiters: Here's an R&D lab run by, and for, students
- Apps that waste your time (in a good way): Execs' addictions
- WTIA announces Industry Achievement Award finalists
- Analyst sees 7-inch iPad in Apple future
- Check out this app: Executives list the ones they use most
Mass High Tech
VCs forced to wait longer to see returns in most industries
It is taking much, much longer for venture capitalists to earn money on their investments in software, communications and electronics-- one of the big problems plaguing the venture industry. According to research released today by SVB Analytics, the median-month-to-exit for a venture-backed software company in 2008 was 91 months or nearly eight years.
That compares to the dot-com boom year of 2001 when it took just 21 months for a company to get from series A financing to an IPO or acquisition. Of course, those frothy times may never return and they created serious problems that VCs are still dealing with.
Nonetheless, the 91 months represents the longest amount of time for VCs to realize exits in the software business in at least 14 years. In 1998, by comparison, it took just 26 months for venture capitalists to see returns.
Other industries -- including communications/networking, medical devices/equipments and electronics/hardware -- also are at high points in terms of the amount of time it takes VCs to cash out.
Of course, more time equals more money. And the report also shows that it is taking more cash -- a median amount of $22 million in 1998 -- to get a company to an exit event.
That compares to just $9 million in 1998. (The high point was $25 million in 2006.) Furthermore, when the software companies did achieve an exit in 2008 -- they returned a median amount of $25 million.
That was on par with a decage ago. But given the amount of time and cash that investors must put forth, there's one conclusion that can be reached from the analysis: It is getting much harder for VCs to make a buck.
SVB also released research for semiconductors, biopharmaceuticals, electronics/hardware, communications/networking and medical devices/equipment.
The electronics/hardware industry also was at high point in terms of median-month-to-exit at 77 months, as was medical devices/equipment at 88 months; and communications/networking at 86 months.
The semiconductor industry saw a sharp drop off in the amount of time it takes for a venture-backed company to reach an exit, down to 48 months in 2008 from 74 months in the prior year. Biopharmaceuticals saw a small decline in the amount of time to exit, down to 64 months in 2008 from 72 months.
If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.
TechFlash Team
Recent Sponsor Posts
Who's creating today's energy efficient buildings? Find out at the BetterBricks Awards, Feb. 16
BetterBricks Awards salute the individuals leading the way for high performance commercial buildings with an emphasis on energy efficiency. Join us as we recognize these standout green building professionals.
Award categories include: Advocate; Architect/Designer; Facility Manager/Operator; and Owner/Developer.
Keynote Speaker: Kevin Kampschroer, Director of U.S. GSA's Office of Federal High Performance Buildings. Kevin leads the U.S. General Services Administration's efforts in building sustainability and accelerating industry adoption of sustainable principles across all aspects of a building's life.
Register here by February 10!
If you are interested in buying a table, email Monica Alquist or call her at 206-876-5404.
The Triple Door Presents: The Atomic Bombshells "J'ADORE!: A Burlesque Valentine"
Seattle's reigning Burlesque super-troupe delivers a gorgeous and glittering VALENTINE featuring some of the Bombshells' most exhilarating acts to date. J'Adore! promises to celebrate l'amour with good humor, style, and a healthy dose of dazzle! Bring a friend, a lover, a family member, or a secret crush, and celebrate with the Valentine's Burlesque spectacular that will leave you shouting: "J'ADORE......The Atomic Bombshells!" The incomparable Jasper McCann emcees with high style and charm.
Please visit www.thetripledoor.net for a full schedule of future performances.
The Triple Door Presents: Bob Mould – See A Little Light: An Evening of Reading and Music
"Bob Mould. Those two words are synonymous with integrity. From Husker Du in the last century to right at this moment, Bob is the real deal, writing and playing music for music's sake. He's a great songwriter and performer. I have been a fan of Bob's for thirty years now with no end in sight." -Henry Rollins
Please visit www.thetripledoor.net for a full schedule of future performances.
Why Choose BDO for your SOC (previously SAS 70) Reports?
BDO’s experience in providing attestation services (SAS 70/SSAE 16, AT 101, AT 201, AT 601, etc.) to a broad range of industries, and our team of skilled professionals distinctly qualifies us to serve as your company’s Service Auditor. By leveraging the BDO global network of control specialists, we are poised to provide global services in more than 1,000 offices and across 119 countries. Many organizations find that investing in reports on controls may result in benefits, including:
• Increased client confidence
• Improved competitive advantage
• Minimization of frequent audits
• Streamlined business processes and controls
• Enhanced risk management
For detailed information contact Paul Martini at pmartini@bdo.com.
