Investors admitted: a lot of money, but there are not enough startups
Internet companies and other tech start-ups are not able to master the billions of dollars that venture funds are willing to invest in them. Judging by the latest events, this is exactly the situation that has now developed in the venture capital investment market.
This shock has caused investors to act venture fund Sevin Rosen Funds . A solid and respected fund with a 25-year history in the last few months has raised from$ 250 million to $ 300 million of funds that were planned to be invested in start-ups of a wide variety of profiles, including Internet companies.
However, the unexpected happened on Friday. Each investor who invested in the Sevin Rosen Funds received a letter in which it was said that the fund had already raised enough money, so that the acceptance of funds was terminated. Received applications are returned back.
Experts Sevin Rosen noted that there is too much competition in the venture capital investment market, so you have to choose projects with too high risk levels. A change in the situation is not forecasted in the foreseeable future. Worse, “the traditional venture investment model does not seem to work anymore,” said fund representatives in an interview with NYTimes . Apparently, they mean that the rules for access to the stock market are now heavily tightened, so the IPO was a rare event.
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Thus, the leaders of Sevin Rosen voluntarily refused to raise funds. This is a very surprising decision, given that the venture capital market is growing rapidly now . Every year, billions of dollars are added to this. At the end of2005, a record amount of $ 261 billion was under the management of venture funds. On the market there are very large deals. Literally these minutes, negotiations are underway to buy a YouTube startup for $ 1.6 billion .
However, such billionth transactions are quite rare. In reality, strangely enough, real emptiness reigns in the market of Internet startups. At the same time, with new financial injections, competition among venture funds is growing. Due to competition, they lose profits and are forced to increase risks. The decision of the Sevin Rosen company looks unusual also because usually the venture funds seek to collect as much money as possible, and decide what to do with them later, in the meantime receiving their interest on asset management.
A similar case occurred during the first dot-com boom, when Crosspoint Venture Partners carried out a refund of “extra” money. Then it was perceived as a bad sign and provoked a number of similar actions by other venture funds.
In general, such decisions by venture funds clearly indicate an overheated market in which there is a surplus of money. Statistics of investments in Web 2.0 startups can indeed indicate that the market is overheated.
This shock has caused investors to act venture fund Sevin Rosen Funds . A solid and respected fund with a 25-year history in the last few months has raised from
However, the unexpected happened on Friday. Each investor who invested in the Sevin Rosen Funds received a letter in which it was said that the fund had already raised enough money, so that the acceptance of funds was terminated. Received applications are returned back.
Experts Sevin Rosen noted that there is too much competition in the venture capital investment market, so you have to choose projects with too high risk levels. A change in the situation is not forecasted in the foreseeable future. Worse, “the traditional venture investment model does not seem to work anymore,” said fund representatives in an interview with NYTimes . Apparently, they mean that the rules for access to the stock market are now heavily tightened, so the IPO was a rare event.
')
Thus, the leaders of Sevin Rosen voluntarily refused to raise funds. This is a very surprising decision, given that the venture capital market is growing rapidly now . Every year, billions of dollars are added to this. At the end of
However, such billionth transactions are quite rare. In reality, strangely enough, real emptiness reigns in the market of Internet startups. At the same time, with new financial injections, competition among venture funds is growing. Due to competition, they lose profits and are forced to increase risks. The decision of the Sevin Rosen company looks unusual also because usually the venture funds seek to collect as much money as possible, and decide what to do with them later, in the meantime receiving their interest on asset management.
A similar case occurred during the first dot-com boom, when Crosspoint Venture Partners carried out a refund of “extra” money. Then it was perceived as a bad sign and provoked a number of similar actions by other venture funds.
In general, such decisions by venture funds clearly indicate an overheated market in which there is a surplus of money. Statistics of investments in Web 2.0 startups can indeed indicate that the market is overheated.
Source: https://habr.com/ru/post/4495/
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