VC Fund1/3 of the worlds total VC funding is located inthe Silicon Valley.The total amount invested in Silicon Valley was$11.6B in 2011 up from $9.1B in 2010.The two most popular ventures are software($6.7B) and biotech ($4.7B).
VC FundSilicon Valley is a magnet to which numeroustalented engineers, scientists and entrepreneursfrom overseas flock to in search of fame, fastmoney and to participate in a technologicalrevolution whose impact on mankind will surelysurpass the epoch-making European Renaissanceand Industrial Revolution of the bygone age.
VC FundIt is noteworthy that close to 50% of its skilledmanpower, including engineers, scientists andentrepreneurs, come from Asia. Prominent amongthem are Indians and Chinese, and not a fewSingaporeans. They include such illustrious namesas Vinod Khosla who co-founded SunMicrosystems, Jerry Yang of Yahoo fame andSingaporean Sim Wong Hoo, to name a few.
VC FundThe Valley’s professionals are among the mosthardworking people anywhere. A 15-hour day and7-day week is not uncommon, especially duringthe start-up stage. They would give up social life,and curtail their family life too, in order to pursuethe pot of gold at the end of the rainbow. It is thissingle minded pursuit of excellence, supported bystrong ethics of team work and esprit de corps,that sustain them until their mission isaccomplished.http://www.slideshare.net/dmc500hats/incubator-20-a-silicon-valley-success-
VC Fundhttp://www.go4funding.com/Articles/Angel-Investors/Angel-Investor-Returns.aspxMany early/seed-stage investors actuallyearned on average a compound ROI of 65.5%over the last five years. When an entrepreneurputs into perspective the projected value oftheir company in five to seven years, theamount of equity that investors receive, andtheir return outcome, their company’s ROI isat least 30-40%.
VC Fundhttp://techcrunch.com/2012/01/03/crunchbaseexits/The average successful company has raised $25.3 million,and sold for $196.8 million, a profit of 676%. Meanwhile,IPO-bound companies generated lower percentage returns,but made a lot more money per exit. The average oneraised $580.3 million while private, then went public with amarket cap of $2.3 billion on its first day of public trading for303% profit on investment (investors probably aren’t sellingall their stock on the first day, this is just one way tomeasure IPO exits).Peak ages of return seem to be 1.5 years and 7.5 years.
VC Fundhttp://www.ey.com/Publication/vwLUAssets/Globalizing_venture_capital_-_Global_venture_capital_insights_and_trends_report_2011/$FILE/Globalizing_venture_capital_Global_venture_capital_insights_and_trends_report_2011.pdfThe main exit route for VC-backed companies in the US is acquisitions (M&A),representing 80% to 90% of all exits. Fortunately, acquisition prices havestayed at reasonably high levels, even during and after the ﬁ nancial crisis. Forexample, in the US for 2011, the ﬁ ve biggest acquisitionsranged from US$700 million to US$800 million. Prices shouldremain fairly high and M&A activity can be expected to remainconstant or increase over the next year, given companies’current option to go public and the fact that the 15 largesttech ﬁ rms are holding US$300 billion in cash for acquisitions.(Google alone acquired 48 companies in 2010 for US$1.8 billionand 79 companies in 2011 for US$1.9 billion.
VC FundThe 2011 VC market in the US is recovering to the levelsseen just before the irrational dot-com spikes of 1999and 2000. Levels are now almost back to where they werebefore the 2008 ﬁnancial crisis.The US maintains a strong lead, with about 70% of globalinvestment in any given year, driven by Silicon Valley.
VC FundVenture capitalists and angel investorscategorize startups into stages based on a numberof startup parameters including who makes up themanagement team, the value proposition, therisk, customers’ profiles and engagement,revenue, etc. and provide equity financeaccordingly. Most startups are categorized intothe following stages:
VC Fund● Idea stage. This is the initial excitement period, the time when you dream of riches and fantasize the life of a business owner, but you have no real plan. At this stage, no professional investor will touch you unless you have a beautiful track record of success with previous startups. Funding will only come from you, or friends, family, and fools.● Early or embryonic stage. Investments at this stage are typically called seed investments. Funding of $250,000-$1 million is available from angels, if you have credentials and have done the homework of a good business plan, financial model, and executive presentation. Anything less the $250,000, or any amount at this stage with no credentials, still has to come from friends and families, loans, or federal grant sources.● Funding or rollout stage. This is the realm of venture capital professional investors, with funding amounts of $1-10 million, often referred to as the “A-round,” or first institutional funding. At this stage,
VC Fund● your startup better be selling a commercial offering, have price and cost validated, with significant customer sales and a real revenue stream. Lesser amounts remain in the angel realm.● Growth stage. Additional funding rounds for growth are often called the “B-round” through “G-round”, with each being in the $5 million to more than $50 million from venture capital and other sources. Companies at this stage must have a large market, good traction, and be focused on scaling infrastructure and market adoption. This normally means more than 30 employees, and more than $1 million in revenue.● Exit stage. This is the final stage of investment in venture opportunities, and is the point where investors expect to see the return and gain from the original investment. At this stage, you need investment bankers to negotiate a merger or acquisition (M&A), go private, or help you go public with an Initial Public Offering (IPO).
VC FundRecent Success Stories 2012:Instagram sold to Facebook for $1B, a growth of 1179%within 6 months.Draw sold to Zynga for $210M. It became the top app.within 7 weeks.Wildfire sold to Google for $250M (rumor has it).There are more than 4.6B mobile users in the worldcurrently, and continuing to grow; thus mobile apps is thefastest growing industry with no signs of slowing down.Conclusively, catch the wave of Silicon Valley successstories!