Last month, the NVCA reported 1Q 2013 venture capital investment data. Venture capitalists invested $5.9 billion in 871 U.S.-based companies. Many of the startups attracting the media’s attention are bootstrapping their existence. Are those the companies receiving venture investment? Not exactly. Take a look at the data below.
We caught up with Venture Partner Alan Ying to discuss the data.
Q: Most of the companies receiving venture investment in Q1 are fairly developed companies (beyond the startup/seed stage). As an early stage investor, is it troubling that most VCs are investing in expansion and later stage companies?
Alan Ying: No, innovation continues to remain strong. Comparing early stage and later stage companies is like comparing apples and oranges — each stage company uses venture capital investment differently to build their company. Generally speaking, early stage companies are typically getting their product / service off the ground. Later or expansion stage companies are building multiple product lines, which can be more capital intensive — which is why you see more capital invested in those later stage companies. These companies are usually 3+ years old.
Q: What else can you tell us about this data?
Alan Ying: Well, venture capitalists are long term investors, so looking at a single quarters’ data doesn’t provide a complete picture of the startup market. It is good to see a bulk of the attention is given to early and expansion stage deals — this is where VCs can add the most value. During these stages, companies are being developed from an idea and growing.