Growthink Blog

The Secrets of Early Stage Private Equity Investing


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According to 20-plus years of data collected by Thomson Financial, early, or seed stage, private equity investing has over the long-term, outperformed all other investment classes -- with average annual returns of over 20.6%.

Venture Capital Investing Climbs to Six Year High


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Amid the tumult in the public markets, venture capital investments in U.S. startups remains very, very strong -- climbing to a six-year high of $29.4 billion in 2007. It was the busiest venture capital investing year since 2001, with investment spread across 3813 deals, and 11% more money invested than in 2006.

Perhaps most encouragingly, both the venture and individual investor forecasts for 2008 early-stage investments are robust - in spite of and perhaps even driven by public market equity and debt investment uncertainty.This robust outlook is confirmed by the amount of new investment capital that venture capitalists raised in 2007 - $34.7 billion -- 9 percent more than in 2006.

Key market arenas spurring this optimistic outlook include health care and biotechnology, Internet-based business models, and alternative energy. These three sectors accounted for more than 55.1% of 2007 VC investment -- with positive and recession-resistant outlooks for these sectors in 2008.

Growthink's long-term view regarding the early-stage private company investment market remains strongly bullish. Long-term investment return data supports our view that early, or seed stage, private equity investing will always, over the long-term, out-perform all other classes of investment. According to Thomson Financial's US Private Equity Performance Index, 20-year early/seed stage private equity investment has averaged over 20.6%/year in investment return - easily out-performing investment classes including later-stage private equity and public market indices.

Our more prescient short term guidance -- avoid listening to the chattering classes with their "it bleeds it leads" mindset to stoke fear and crisis. The capitalist system that has and will continue to create prosperity to the world is led and driven by entrepreneurs and managers with the resiliency and foresight to act while others dawdle and fret. The great ones are acting now. What will you do?


The Business Of Ideas


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The best entrepreneurs and executives at fast-growing companies have the ability to move efficiently and profitably from ideation to execution, and then from execution back to ideation and then back to re-focused execution. And they do so regarding all aspects of their businesses -- marketing and sales, operations and finance.


Raising Capital - How Long Does it Take?


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Most entrepreneurs and managers of companies seeking outside capital vastly underestimate how long it will take them to successfully complete a financing. Here's the reality check: in our experience, we've seen that, on average, a company and a management team seeking financing should budget between 500 and 1000 work-hours to the capital-raising process, spread out over a 6 month time period.


Read the full article here.


Top Seven Capital-Raising Mistakes


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In my experience of working with many managers and entrepreneurs that have had great success in raising capital for their businesses, as well as our experience of working with as many that have struggled, here are some of the key mistakes I see most typically made:

Great Q and A on Guy Kawasaki's blog re legal issues and new startups


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Can be read here at - http://blog.guykawasaki.com/2007/10/ten-questions-1.html - all aspiring entrepreneurs should take in this advice - in general Guy's blog is one of the best (if not the best) out there re venture capital, entrepreneurship, and technology.


Limited Partners Put the Heat on Venture Capitalists


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In a recent New York Times article entitled Some Unrest Is Bubbling Beneath the Top Tier author Matt Richtell shares a key issue faced by venture capital firms -- satisfying limited partners.

Limited partners are the firms that invest billions of dollars in venture capital firms so that they can then invest in high-growth ventures.


Charles River Ventures QuickStart Calculator


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As a follow-up to last week's post on Charles River Ventures' QuickStart program, we created an online equity calculator based on the CRV QuickStart formula.

The calculator allows up to 5 rounds of financing and shows the equity that the management team, CRV, and other investors get. You can view the calculator here: http://www.growthink.com/CRVCalculator.htm.

Nothing too fancy, but it works.


CRV Offers Creative Financing


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According to Venture Beat, Charles River Ventures (CRV), an early stage venturecapital firm, has launched a new investment strategy, offering rapid but tiny $250,000 checks to Internet start-ups.


VC investments in Web 2.0 companies booming


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I just read this post from Venture Beat. In summary, venture capital investments into “Web 2.0” Internet companies this year are on track to double last year’s levels to about $500 million.


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