The INOV8 blog tracks the latest news and trends in technology and innovation throughout the world
This, thanks to Google Alerts, from an analysis of “U.S. productivity and competitiveness” by AmericanProgress.org:
Venture-capital investment neglecting early innovation
Investments by venture-capital investors are also recovering slowly. In the four quarters through September 2011 venture-capital investments amounted to more than $27.1 billion, up 13.5 percent over one year prior, but still 15 percent lower than before the financial turmoil in the second half of 2008—and less than one-fourth of the level at the end of the 1990s dot-com era, after adjusting for inflation.
The slow recovery of VC funding reflects less a lack of opportunities or resources and more a lack of risk appetite from VC investors. Financing for expansion and late-stage VC investments is up more than 22 percent since the start of the current business cycle. Over the same time, however, VC investments in seed-stage companies have fallen by 41 percent after adjusting for inflation.
With low overall investment and employment creating uncertainty for economic growth, venture capitalists are seeking more proven investments over riskier startup businesses and innovations. Many viable and transformational innovations are potentially not being brought to market because of the private sector’s unwillingness to finance such investments.
Note the second paragraph. Is this still the case? Do investors remain more hesitant than usual to jump when it comes to early-stage ventures? Do these numbers seem right?
Seed funding is always tricky. Then there’s that whole valley of death thing. Has the stalled economic recovery impacted, to the degree suggested above, the willingness of investors to take risks? What do you think?
Share your experiences in comments.
I would like to see a study on U.S. angel investing trends over this period. My hunch is that angels are making up for some of the VC’s lack of seed stage risk taking.