Interesting take on the opportunity for venture capital and why NOW, not yesterday was a great time to invest in venture firms by William Quigley at Clearstone Venture Partners.
Did you know that some of the companies often held up as home runs for venture firms didn’t actually make that much money or exit for very significant multiples?
- Amazon, IPO Valuation $ 440million, 0.7x revenue
- Microsoft, IPO 1986, Full Year Revenue – $198 million – Valuation at IPO – $650 million
- Cisco, IPO 1990, 1991 revenue $183million. Valuation at IPO, $225million
- Electronic Arts, IPO 1989, 1990 revenues $102million, IPO Valuation – $73million
Quigley argues the so called Golden Age of Venture Capital wasn’t such a Golden Age at all when you consider the returns and multiples those companies achieved. The amazing rise and collapse in the amount of venture capital funds raised over the past couple of decades obscures the extraordinary opportunities for investors to make returns on the asset class.
Who broke the Venture Capital 'hockey stick'?
Download the full presentation: Quigley Report: A Venture Capital Revival is Upon Us
The growth of the Internet, better informed capital markets and the fact that startups now expand globally much more rapidly mean that the valuation multiples a company achieves on exit are much, much better now for the investment community. This, coupled with the fact that venture capital is a rather unfashionable asset class at the moment, so fewer limited funds are investing and therefore fewer venture funds are active, means that this is the new Golden Age.
No great surprise that the big returns for investors will come from mobile, cloud, social gaming.
If you are interested in growing or investing in successful, profitable businesses, you would be mad, absolutely mad, to miss:
- BLN Money in Mobile, June 14th – http://moneyinmobile2011.thebln.com/ – How companies make money in mobile.
- BLN Growth Forum, July 5th – http://growthforum2011.thebln.com/ – For grown-ups running growth businesses.