Venture Capital Investing Trends For 2010
Today I read an interesting article in Inc.com. It described the current state of the Venture Capital industry. To sum up, the article explained how the first quarter of 2010 showed an increase in the IPO or M&A exits of companies backed by venture financing. Nine companies went public, compared to none during the first quarter of 2009. Also, 111 VC-backed M&A deals occurred between January and March of 2010. Most importantly, 81 of the 111 M&A Venture Capital Investing deals were in the IT sector.
The high number of exits among the IT companies naturally attracts the attention of the venture investors. Therefore, it is no surprise that in Q1 IT received the most venture capital financing — second only to the biotech companies. The MoneyTree Report suggested that the post-economic downturn environment forced a lot of VCs to seek less risky investment opportunities with companies in the expansion stage rather than start-ups.
What this means for OpenView Venture Partners is that VC competition in 2010 will be fierce as expansion stage technology companies are our primary targets. Still, this would also be a great opportunity for us to differentiate our investment model with the value added services that we provide to our portfolio companies. We will not just provide you with the funds, but we will also help you understand how to best use them.
CAC payback period is a fantastic metric to measure success. But despite your best efforts, you might still be getting CAC payback wrong. Here’s what to avoid.