Go4Venture published their monthly report in this week. They report: “October 2009 showed a healthy amount of activity on the funding front, suggesting that the market is still alive and kicking, albeit from a lower level. One cannot deny that the environment is different than in
previous years: more international, more selective and of course more capital efficient. According to our index, overall investment levels continue to be approximately -30% lower than last year, pretty much what we’ve been reporting for the past six months.”
But they continue: “The continued activity of the venture market is unfortunately in sharp contrast with Limited Partners’ interest in European venture capital as an asset class. The only closing announced in October was for Vendis Capital, a retail and consumer specialist fund seeded by the family office of the Colryut family. Belgium-based Capricorn announced the launch of its “human health technology” fund (including medtech), although it will be some time before its first closing. Otherwise, it was pretty much doom and gloom in the news with both the US and Europe reporting the worst funding environment for VC funds since 2003 and 2000 respectively (and since 1994 in the US if one just looks at the third quarter).”
We can assume that a part of this dip is temporary and Limited Partners will return to make VC fund investments in the next year. But we have reasons to believe that Limited Partners are decreasing traditional VC fund investments also in long-run. Many LP’s have not been happy for VC funds’ ROI. They also criticized high management fees and especially tier #2 VC’s competence to find and manage future growth companies. This is one of reasons, why we at Grow VC, see the need of new funding models for startups. We must get the market more transparent and effective, and more global. Our new model (launch in January) is especially to fulfil these needs.
