Tag Archives: National Venture Capital Association

2014: The Year of results — not bubbles


http://venturebeat.com/2014/01/02/2014-the-year-of-results-not-bubbles/

January 2, 2014 10:00 PM
bussgang, Jeff Bussgang

A year ago, I felt 2013 would be the Year of Grit – a year characterized by toughing things out in uncertain times.  Well, we certainly did that, and 2013 has ended up looking a heck of a lot better than it began.

2014 is shaping up to be the Year of Results.  We begin 2014 with a lot of optimism in the air.  In a recent survey conducted by the National Venture Capital Association, portfolio company CEOs and VCs are feeling as good about the future as they ever have, with a stunning 86 percent of CEOs who plan to raise capital saying it will be the same or easier to do so as compared to last year.  Half of CEOs and VCs are optimistic about next year’s exit environment.

A rising stock market makes everyone feel good.  The NASDAQ is up 30 percent this year and achieved its highest level since September 2000.  The S&P has closed at a record high 44 times in 2013, and the Dow Jones has achieved 50 record highs this year. Both indices are up more than 20 percent.

When the stock market is down, we VCs like to say that our little tech companies are not affected and simply keep their heads down and build valuable companies.  But when the stock market is up, sentiment swings quickly.  We rush to take companies public or sell them to take advantage of “the exit window”.  It is natural, therefore, that a robust stock market has led to a robust IPO market.  More and more companies are eyeing 2014 and research conducted by analyst firm 451 suggests it will be a record year for tech IPOs and also suggests M&A will see a strong increase in 2014 as compared to an already solid 2013.

Now it is time to deliver on all that promise.  Aileen Lee’s now-famous unicorn analysis listed 39 companies founded in the last 10 years who had achieved $1 billion plus valuations.  Twelve are private companies (Palantir, Dropbox, Pinterest, Uber, Square, Airbnb, Hulu, Evernote, Lending Club, Box, Gilt, Fab.com).  At least another dozen with very lofty private valuations wait in the wings (including Spotify, MongoDB, Snapchat, Etsy, Actifio, Automattic, OPOWER, Hubspot, Flipboard, Hootsuite, Appnexus, and many others).  Not all of these companies will go public or sell in 2014, but a good number need to in order to deliver on the promise that has been built up in this post-bubble, post-recession era.

And if you are worried about bubbles right now, don’t.  I wrote a blog post two and a half years ago in response to cries of a bubble that it felt a lot more like 1996 than 1999 right now.  In other words, when analyzing unemployment rates and other macroeconomic fundamentals as well as positive structural elements of the tech economy, the rebound was just beginning and had a good four or five year run in front of it.  Sitting here at the end of 2013, I still feel that to be the case.  The fundamentals of a rebounding U.S. economy in combination with the disruptive forces of the cloud, mobile, big data and software eating everything remain strong.  The start up economy will overheat at some point, it always does, but that point is not now.

So, buckle up for 2014 — a year where many of those lofty promises of better times over these last few years begin to convert into tangible results.

This story originally appeared on Jeff Bussgang.

http://venturebeat.com/2014/01/02/2014-the-year-of-results-not-bubbles/

Venture-backed IPOs surge to highest level since the Great Recession


Venture-backed IPOs surge to highest level since the Great Recession
Eric Blattberg / VentureBeat

The floor of the New York Stock Exchange during Twitter’s IPO on Nov. 7, 2013.

2013 was a good year to be a venture capitalist.

In the fourth quarter of 2013, 24 venture-backed companies made their initial public offerings, collectively raising $5.3 billion. It was the third consecutive quarter with more than 20 VC-backed IPOs, making 2013 the best year for new listings since 2007, the year before the Great Recession, according to data collected by Thomson Reuters and the National Venture Capital Association (NVCA).

Overall, 82 venture-backed companies offered their initial public shares in 2013, raising more than $11.2 billion. 2012′s dollar total was higher, at nearly $21.5 billion, but that’s largely attributable to Facebook’s $16 billion IPO; 48 other companies account for the remaining $5.5 billion. Excluding Facebook’s blockbuster IPO, this past quarter marks the highest dollar total raised by venture-backed companies since the second quarter of 2011.

Twitter had the most widely discussed IPO of the year, generating a record $1.8 billion for the company (and another $300 million in the following days, when Twitter’s underwriting banks exercised their option to sell an additional 10.5 million shares). But the biotech sector was the year’s quiet winner, accounting for more than half the IPOs in 2013.

The strength of the overall IPO market in 2013 — especially in biotech – is thanks to the JOBS Act’s onramp provision, said NVCA’s research chief in a statement. The JOBS Act eases the process of going public for “emerging growth companies,” or businesses with less than $1 billion in annual revenues, enabling them to submit registration statements to the SEC on a confidential basis.

Because of the SEC doesn’t publish statistics on the number of confidential IPO registrations it receives, the IPO pipeline has become cloudier, but that doesn’t appear to have hindered the success of IPOs. Of the 24 companies that went public in the fourth quarter, 22 are trading at or above their offering price.

Merger-and-acquisition deals didn’t fare as well in 2013, however. With 377 acquisitions of venture-backed companies this year, 2013 was the slowest year for M&A deals since 2009.

For more details on the IPOs and M&A deals of 2013, check out the chart below.

IPO and M&A chart (2013)

http://venturebeat.com/2014/01/02/venture-backed-ipos-surge-to-highest-level-since-the-recession/