USA VCs turn optimistic, crawl out from under their rocks

Uncanny clairvoyance or simply a case of over-exuberence?  USA VCs turned optimistic ahead of roaring stock markets as Dow Jones VentureSource reports them investing US$5.27 billion in 595 deals in Q2 2009, bouncing back up from the previous quarter.  In the rest of the world (Canada, Israel, China, India and Europe), VC investments continue on its declining trend with US$1.46 billion in 250 deals.  I first caught sight of the data over at Venturebeat’s write-up.

T-minus 3…2…1…liftoff?

VC Investments - Q4 '07 to Q2 '09; Dow Jones VentureSource

I‘m personally still quietly cautious over the recent improvement in sentiments.  I’m not sure how fast the real problems are being resolved, since all governments around the world have done is to print money and tap into reserves, and pour water down a leaky cup to prop up the macro economic figures.  The real issues will take time to unwind, and until then, my bottom dollar will be on any recovery to be temporal.  Still, given that venture capital and economic cycles don’t necessarily mirror each other, I’d say

I’d be keen to see further breakdown of the statistics, as I’m guessing the figures above will contain some noise, i.e. start-ups who are only now receiving cash from existing, less shell-shocked shareholders who have decided to crawl out from under the rocks that they’ve been hiding at for the past few quarters.  I’d be more interested in say, tracking the level of funding going into early-stage venture deals; that will probably serve as a good proxy for the next wave of innovation, post-recession.

Winds of Change a-blowin’

Median deal size continues to shrink; Dow Jones VentureSource

Another phenomenon that’s been long in coming is the drop in median amount of venture capital invested per financing round, possibly explained by factors such as:

1. A shift towards earlier stage deals;
2. More realistic valuations in view of reduced capital; and/or
   
3. More capital-efficient entrepreneurs and business plans who are increasingly seeking to leverage comparable engineering resources via outsourcing or even establishing an offshore captive development presence quickly.

Asia-Pacific, the forgotten child?

It’s a pity there doesn’t appear to be any entity tracking the venture deals in the Asia Pacific, however absymal the figures may be.  Heck, there isn’t even anyone in Singapore doing it!  This is yet another indication of how far out our region is in terms of the global innovation race.  Such data are critical information that can aid our policy makers in our government, and until we can get hold of something meaningful apart from anecdotal sources scattered across collective brains/networks, we’re pretty much flying around blind.

Techcrunch Asia anyone?

Related posts:

1. 2007 VC Rankings by Number of Deals
2. A Wish for Smarter Money in Singapore
3. Fundraising during the Downturn
4. Neoteny Labs
5. Battlestations: Midway rocks!