The Midwest: A New Technological Frontier

As reported in TechCrunch, the Midwest is no longer just a flyover space for high tech proprietors and investors flying between Silicon Valley and New York city. The Midwest has become a bastion for high tech startups in addition to the regions more traditional manufacturing entrepreneurship. Mark Kvamme, a co-founder of the Midwest’s largest — and most recent — venture investment firm, Drive Capital, recently said that, “In the last five years there have been 52 companies [from the Midwest] that have either gone public or been acquired for north of $1 billion." Recently, Sprint invited a group of 10 mobile-health related startups to its accelerator program based in Kansas City. Earlier in March, the Digital Sandbox KC released information stating that it had raised $7 million in follow-on funding for graduates of its accelerator program. Regardless of previous geographical prejudices, the Midwest is now a must visit for tech investors looking for the next big thing. Kansas City continues to lead by example through amazing entrepreneurship programs like Google's Fiberhood and the Kauffmann Foundation's numerous initiatives. Read the entire story from TechCrunch here.

VC Valuation and Trends: Seed Series Rise, Most Other Rounds Fall

November 6, 2013 10:19 by Clayton Reeves in   //  Tags: , , , , , , , , , ,   //   Comments (0)
As reported by Pitchbook, the median pre-money valuation financings in 3Q 2013 fell across the board. The exceptions were Series Seed and Series C, both of which increased to new record highs. Valuatons have been trending higher for the last several years, but it had historically been most pronounced in later stage rounds (Series D or later). However, as we discussed several weeks ago, seed valuations are now skyrocketing, as well as Series C. As you can see above, the deal volume and capital invested has been relatively stable since mid-2012 after a volatile period from 2011 through first half of 2012. Read the entire report here.

Increasing Seed Valuations Making Series A Rounds Difficult

October 18, 2013 08:55 by Clayton Reeves in Capital Markets, Economy, Financing, M&A, Private Equity, Venture Capital  //  Tags: ,   //   Comments (0)
As reported by Pitchbook, seed valuations have increased 62.5% from 2009 through the first three quarters of 2013 for a cumulative annual growth rate of 13.8%. Meanwhile, Series A valuations are increasing, but at a slower rate, from $6.8 million in 2009 to $8.9 million. This 30.8% growth represents an annualized rate of 10.3%. Inflated seed-stage valuations may be having an effect on a startup's ability to raise funding in the Series A round, as seed investors want to see appreciation in their investment, while Series A investors believe the seed valuation was too high. Source: Pitchbook As seed-stage investments increase, companies are finding it more difficult to raise Series A financing.  This is at least partly due to a shift in VC investment philosophy, which has seen the share of seed-stage investments grow as a proportion of total VC investments over the last three years.  VC firms are trying to pick out winners earlier, and get them for a reasonable price.  The competitive bidding, however, is causing those valuations to increase.  It will be interesting to see how this plays out over the next several years, and if the Series A crunch will continue. Read the entire article here.

Women Venture Capitalists: Taking a Bigger Piece of the Pie

Women's positions, or lack thereof, in powerful financial roles is often a contentious topic. However, in terms of venture capital, it seems that there is a trend towards more involvement from the fairer sex. According to Pitchbook, companies with at least one female founder have been increasing their share of venture rounds every year for the last 10 years. This trend is material; 10 years ago, women-founded companies represented a meager 4% of all venture deals in the United States, but in 2013 we have seen that number rise to 13%. Source: PItchbook Men continue to dominate the arena, but the trend is positive. Women own 28.2% of all businesses in the US, according to The Center for Women’s Business Research. So, the venture percentage is still not as high as it should be, in order to be proportionate to gender based ownership. However, in certain sectors, women are dominant. Through the first half of 2013, women-founded companies comprised 40% of venture deals in the retail space and 33% in the consumer services space.  Both of these figures represent high water marks for the space. Hopefully these figures will continue to increase, as diversity is always a catalyst for innovation and new perspectives. Read the entire article here.

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