Can Venture Capital Be Truly Global?
Globalization has changed venture capital. VCs can no longer boast that they won't invest if the company is more than an hour away. Some VCs have set up joint ventures in Europe, India and China; others have dispatched partners and junior staffers. What is the impact on the entrepreneurs who have long depended on VCs not just for money but for introductions and access to their networks? A panel of experienced investors will discuss the new landscape and share their perceptions of how their missions have changed with the globalization of the economy. How are they sourcing and vetting companies? How do their investment interests vary by region? How valuable are cross-borders investments? Or should they even consider going global?
Funding: Where is the Money?
The recession has made it harder for venture-capital firms to raise funds, causing already picky investors to become even more selective about the firms they choose to fund. Competition for venture capital has always been fierce, but the economic meltdown has intensified the battle, forcing companies that would have been able to secure funding a few years ago out of the game. Venture capitalists raised $8 billion in 83 funds during the first nine months of 2010, down from the $18.9 billion raised by 141 funds in 2009, according to a Dow Jones report. Given this climate what are startups alternative sources of survival? What should burgeoning companies do to make themselves stand out in the startups pool?
Where to Invest in 2011 and Beyond? And Where is the Exit?
Where are the hot new geographies and startup sectors that venture capital will deploy funding? First, the new mantra for entrepreneurs of budding startups is "capital efficiency." What this means is venture firms are looking at regions that can build promising companies capable of producing more product for less cash, offering better ROI. That path has often led to China and India but has also seen favorable returns in Europe. For example, some industry estimates put the ROI on China upstarts at 10x what a startup investment in the United States returns. Also, smaller, more-focused investments from smaller funds are proving better vehicles for GPs to produce returns to their LPs. Along with capital efficiency, manufacturing-intensive investments are taking a back seat to funding priorities of intellectual property and software, among others.
As importantly: Where is the exit? How do investors, both LP and VC, insure a sustainable ROI in an unstable market?
* Subject to change