It will be harder to raise Venture Debt for a while.

Sur le même thème que "It will be harder to raise Venture Debt for a while."

What impact will the credit crunch have on venture financing for startups?

An entrepreneur asked me recently if I was concerned about the impact the credit crunch will have on venture financing for startups. I responded: For high quality companies, the short answer is no. The more nuanced answer is that (i) The credit crunch will impact venture debt (already has) so people can’t count on that to extend their runway, so should raise a bit more than they would have done (ii) If the economy indeed slips into recession (as a second order effect of the credit crunch), then this will impact sales growth for many startups, whether selling to enterprises or consumers. This will also impact timelines to profitability, and hence amount raised. It will also likely cause some angels and some venture firms (especially corporate venture firms and firms with a shorter time horizon) to become less active investors. [lien] [EN]

Founders, be ready for the long haul

The chart below shows the average time in years between a startup’s first equity investment (usually Series A) and its sale, for companies sold in each year from 1997 to 2007. (Source is Dow Jones Venture One/E&Y study) As you can see, companies sold in 2007 had seen almost seven years pass since their first financing. Often they were founded up to a year before they took their first financing, so they were likely eight years old when they were sold. These numbers are averages - some companies exit faster, but some exit slower as well. This data represents M&A exits. Usually the time to exit via IPO is even longer. Although no data is available yet for 2008, there has been virtually no venture backed IPO activity in 2008, and the number of M&A tractions is sharply down from previous years. [lien] [EN]

Looking to raise capital? Send an executive summary.

Rick Segal’s (a VC in Canada) recent post made me smile with recognition: It’s around 2a in Toronto, midnight here in Edmonton. 260 summaries, plans, ideas, and virtual napkins are staring at me with an evil grin. It can feel like it is hard to get a VC’s attention. I’d like to think that it isn’t because we’re bad people, and it isn’t because we’re lazy people. But we do get pitched a lot, and the ambient noise level is high. The quote above goes some way to explaining why a VC can’t give an hour to every entrepreneur who wants to meet. So what is the best way to break through the noise? I agree with Venture Hacks’ advice on what to send an investor when they say: Summary: An introduction captures an investor's attention, but a great elevator pitch [executive summary] gets a meeting. [lien] [EN]

Tradional media companies are unlikely to be buyers of consumer internet companies for a while

Over the last few years TV and Print publishing companies have been acquiring internet companies and providing the primary source of exits as IPOs have been few and far between. Exits have included MySpace and CNet on the top end to last.fm and Plaxo in the middle and Kaboodle and LX.TV on the smaller side. It looks like there will be fewer such exits in 2009. The major newspaper companies are in trouble (including Tribune and NY Times) with their debt loads which will make acquisitions difficult for them. It isn’t any better on the TV side. PaidContent reports from UBS Media Week that Viacom has no acquisition plans for a while: Viacom President & CEO Philippe Dauman told attendees … that the company is focused on organic growth and tended to avoid acquisitions for the past two years… “We have plenty to do in. [lien] [EN]

True Story Of A Guy Who Beat Debt

Last night, I saw the show “Man Vs. Food”.    It is a pretty funny show in which the host visits restaurants that have some kind of food eating challenge. In the same vein, last week, I challenged readers to share stories of way they have gone from being “revolvers” to “deadbeats”.    (Revolvers are people who carry a balance on their credit card, while deadbeats are those who always pay  their balance in full. The best reply I got was a reader named Jonathan - I finally converted from carrying thousands in debt to a deadbeat, but it was one of the hardest things I’ve ever done.  I’ve kept the credit cards, but they are all payed off in full.  One thing that helped was getting a charge card which feels like a debit card (and pays for itself with the amount I spend). [lien] [EN]

Government could make monetization even harder for online ad networks and publishers

Government could make monetization even harder for online ad networks and publishers August - Posted by jeremyliew in ad networks. In the last few years, behavioral targeting has gone from being an interesting experiment to core to the success of many ad networks. Many networks are using data collected from one site to improve the targeting of advertising on other sites. But in the past two months, both the FTC and some members of the House have discussed limiting the ability for online advertisers to do behavioral targeting. Businessweek notes about the new FTC Chairman: Leibowitz wants to terminate—or at least rein in—… delivering ads to individuals based on the Web pages they visit and searches they carry out. Appointed by President Barack Obama in February to run the country’s top consumer watchdog. [lien] [EN]

Warburg Pincus Raises $15 Billion Fund

Warburg Pincus, appearing to shrug off the credit squeeze that has made life harder for many of its buyout rivals, said Tuesday that it raised $15 billion for its new global fund, easily surpassing its $12 billion target. Warburg Pincus’s latest fund is nearly twice the size of its previous one, which came to $8 billion. However, Joseph Landy, the private equity firm’s co-president, told The Financial Times that the fund-raising climate was starting to deteriorate for private equity. A majority of the deals Warburg Pincus invests in are growth capital or venture capital investments that involve little or no debt, making it less affected by the turmoil in debt markets. Among the investors in Warburg’s latest fund are the Washington State Investment Board and GE Asset Management. [lien] [EN]

ARKeX Raises USD30 Million Venture Funding

The investment was led by Ferd Venture of Oslo, Norway, and included existing investors Energy Ventures of Stavanger, Norway; Scottish Equity Partners of Glasgow, UK; and members of ARKeX senior management. This is the third round of funding raised by ARKeX since 2004 and the largest venture round for a service company supplying the onshore and offshore oil and gas E&P sector since 2003. ARKeX's technology has already had a significant impact on exploration strategy by reducing overall exploration risk, making it a valuable leading-edge exploration tool for major energy corporations. The company will use the funds to expand the operational capabilities of its airborne BlueQube(TM) gravity gradiometry imaging service and to accelerate production of its proprietary technology. [lien] [EN]

Time to Reduce Debt Quickly Now

In my opinion, we are now at a period of potential asset deflation. The US housing market has been in a decline for the last 3 years. The decline started in 2005. The economy is going south and many smaller businesses are finding it harder to get financing because of unfavorable business conditions. Banks, who have taken huge earning hits in the sub prime mortgage and credit related losses and not aggressive in lending. The general rule of thumb is that you only take on leverage on an appreciating asset. That is why when the housing market is on fire, or even in normal market conditions, taking on a mortgage makes sense because you are taking leverage on an appreciating asset. You also get deductions on your interest payments. The same thing happened in the private equity world where huge leverage buyouts in an easy credit environment coupled with an OK stock market made a lot of sense. [lien] [EN]

Glam Said to Raise More Funding

Glam, the fashion-themed Web portal and advertising network run by Samir Arora, is raising between $50 million and $100 million in cash, and is expected to finalize the amount soon, VentureBeat reported. Along with that will be up to $100 million in debt, but the debt will be raised over the next year, according to the report, which cited anonymous sources. Glam's existing investors, including DAG Ventures, Draper Fisher Jurvetson, Accel Partners, and WaldenVC are all participating in the round, VentureBeat said. VentureBeat writes that Glam “has created consternation in the industry” as the company has “picked off top sales executives from competitors and created considerable animosity in the process.” Go to Article from VentureBeat » [lien] [EN]

ADC Telecom Raises Estimate on Impact of Troubled Debt

Eric Savitz (Barron's) submits: In an 8-K filing with the SEC late Friday afternoon, ADC Telecommunications (ADCT) provided fresh evidence on the potential dangers to tech companies from the ongoing tribulations of the debt markets.Complete Story » [lien] [EN]

Glam Raises $85 Million in Funding

Glam Media, a network of fashion, style and entertainment Web sites, said Monday it had raised $65 million in new venture funding and $20 million in “revenue-based debt financing.” The latest financing round was led by Hubert Burda Media, a German publishing group, and includes GLG Partners, a publicly traded hedge-fund firm. Glam said it would use the funds to drive its “aggressive global expansion in 2008 across new territories and categories,” as well as to make strategic acquisitions and to invest in new technologies. Matt Marshall of VentureBeat describes how Glam’s audience-measuring methods have drawn skepticism from some of its competitors, who argue that its claim to be the largest online women’s network are not accurate, in large part because the numbers include Glam’s many publishing partners. [lien] [EN]

While wantrepreneurs worry about a recession, it's a great time to be a VC [Venture Capital]

newVideoPlayer("VC_love_the_downturn.flv", undefined, NaN,""); During an economic downturn, Scale Venture Partners' Sharon Wienbar explains to Sarah Lacy in this excerpt from a Yahoo Tech Ticker interview, "the strong get stronger, the weak get weaker, the strong buy the weak." Which means that while founding developers are off waiting for their $300 economic stimulus check and trying figuring out a way to make $.92 CPMs on ads on their Facebook apps, life is totally awesome right now for venture capitalists. Another VC, Pascal Levensohn, agrees: "The risk premium is coming back. This is a great time. It imposes discipline on entrepreneurs." In case you needed a translation, "discipline" is VCspeak for "getting ripped off." [lien] [EN]

Spot Runner raises $51 million for "war chest" [Venture Capital]

Spot Runner, the Los Angeles-based TV-advertising startup, is just the latest to follow past rounds of fundraising with another quick grab for money. The company has raised $51 million from a group of international media investors — not the Sand Hill Road club, but corporate names like Grupo Televisa and LVMH. Why raise more money now? None of the entrepreneurs raising outsized rounds are uncouth enough to say that they are raising money simply because they can. Spot Runner CEO Nick Grouf says the company is "raising a war chest." Sure, Google may eventually stop fumbling around and find an approach to brokering television ads that works. But one has to think Grouf is less concerned with an all-out battle against the armies of Mountain View, and more with making hay while the sun shines. [lien] [EN]