Venture Capital is Dead! Long live Venture Capital!

Venture Capital is Dead! Long live Venture Capital!

A current browse of venture capital articles and opinions would seem to indicate that the venture capital model is dead.  The heady days of venture capital seem, indeed, to be over.  According to research firm VentureSource only 119 new venture funds were raised in the U.S. last year, totaling $11.6 billion in assets. That is down from 215 new venture funds totaling $40.1 billion in 2007.

Venture Capital is DEAD!  Or is it?

One should be cautious of declaring a downward spiral on two data points.  Though activity is significantly down, there is still activity.  One may also draw a conclusion that venture capital is harder to come by, that investors have become more cautious or more risk averse in a pessimistic economic environment.

Perhaps the venture capital model is evolving into a newer, hopefully more efficient, version of itself?  One where investors are more patient and cautious, and willing to trade off fast and furious returns for smarter and more fundamentally sound business models?  Or perhaps, venture capital is shifting away from a its traditional approach and evolving into a model where smaller rounds dominate and where VC firms work closely with entrepreneurs, such as the model successfully implemented by Tandem Entrepreneurs.

Which ever way venture capital is evolving, it is clear that companies seeking funding today need to be especially well prepared for the step into the spotlight.  Given the many deals chasing a limited pool of funds, preparation and presentation are becoming increasingly important.

CENAK Consulting L.P. is a boutique investment bank with global reach.  We prepare businesses for fundraising by vetting business models, preparing due diligence materials, and positioning them in the fast changing investor environment.  If you wish to become a CENAK Consulting L.P. client, please submit your information to info@cenak.com

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