Venture capitalism is not what it used to be. The bountiful returns of the dotcom years are long gone and venture capital (VC) firms are now struggling to exit their investments via initial public offerings (IPOs) or mergers and acquisitions (M&A). Also, a new regulatory landscape is threatening to hinder rather than help the industry, and the companies VCs invest in require watertight strategies for major growth. VC experts highlighted these issues and others during a recent panel discussion sponsored by Wharton Entrepreneurial Programs and titled, "Business Exits in the Current Economic Environment."
Appropriately, the event was held at Wharton's campus in San Francisco -- on the doorstep of Silicon Valley, which generates about half of all VC investments worldwide and where venture-backed companies earn about $3 trillion in annual revenues and employ 12 million people, noted the panel's moderator, Wharton management professor Raphael (Raffi) Amit.
But regardless of where their investments are based today, no VC firm has been immune to the global downturn. The number of IPOs by venture-backed companies in the U.S. plummeted from 260 in 2000 to 13 in 2009, and VC-backed M&A transactions dropped from 462 deals worth $99 billion (in disclosed values) in 1999 to 260 worth $12 billion in 2009. Investors, meanwhile, have reduced their commitment to the industry, from $41 billion in 2007 to $15 billion in 2009 in the U.S., according to Amit, who was joined by Larry Sonsini, chairman of Wilson Sonsini Goodrich & Rosati (WSG&R), a law firm in Palo Alto; Ted Schlein, managing partner of Silicon Valley VC firm Kleiner Perkins Caufield & Byers (KPCB) and former chair of Virginia-based National Venture Capital Association; and Frank Quattrone, co-founder and CEO of Qatalyst Partners, a technology-focused investment bank in San Francisco.
To read the full, original article click on this link: Saying Goodbye: New Exit Strategies for Today's Venture Capitalists - Knowledge@Wharton
Author: Knowledge@Wharton
