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Adapting and Evolving | Global Venture Capital Insights and Trends 2014

Ernst & Young recently published a report entitled “Adapting and Evolving | Global Venture Capital Insights and Trends 2014“. It gives an insightful summary on the past year VC performance. According to the “Executive Summary”, “Reversing the decline seen in 2012, investment levels rose 2% to US$48.5b.”

The report points out that across all markets, median deal values in the seed and first round classes fell or saw little change compared to 2012 – confirming the global pattern that most VCs prefer to make bigger investments at the second or later investment stage. Clearly, VCs’ consideration still stays in risk management and investment returns. And this gives Angel and Super Angel investors a gap to fill. The report listed two reasons for “Later-stage VC investing dominates, but angel participation grows”,

  • Median time from initial VC financing to IPO exit remains at 6.8 years in the US (range of 3.9 to 6.8 in major VC markets), and at 5 years for an M&A (range of 3.5 to 6.3 for major VC markets).
  • Many VC firms are relatively late in their fund life cycle; therefore, they are preferring investments that are further de-risked and closer to exit.

In addition, the report shows that VC prefers industries with a fast route to value. And to be specific, favorite sectors for investment globally are overwhelmingly consumer services and information technology. Among the favorites, health care is particularly popular in mature markets.

Further more, the report mentions government’s crucial role both in creating the right funding ecosystem for entrepreneurial and start-up businesses and, in many cases, providing them with vital funding that complements private VC.

In the end, by analyzing VC trends by different regions such as US, Europe, China, and Israel, Ernst & Young report has given a quite positive vision about VC’s performance in the coming year.

To read the full report, please visit here.

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