Professional Documents
Culture Documents
and
its Past Performance
If the business runs into difficulty the VCs will work hard to ensure
that the company is turned around.
In the 1920’s and 30’s, the wealthy families and individuals investors
provided the start up money for companies that would later become
famous. Eastern Airlines and Xerox are the most famous ventures they
financed. Among the early VC funds set up was the one by the Rockfeller
family which started a special fund called VENROCK in 1950, to finance
new technology companies.
Early Stage:
Seed Capital: primary for product development and market research. (seed
investing)
Start-up capital: company has complete business plan, initial marketing begins.
Expansion Stage:
Company is ready for business, but no commercial sales yet.
Later Stage:
Invest in a company throughout the company’s life cycle: providing financing to help
the company grow to a critical mass to attract public financing through stock offering.
%Distribution of Investment
U.S. Venture Capital Investment by Stage of Company Development
70%
60%
50%
40%
30%
20%
10%
0%
1997 1999 2002 2004
R&D
VC Stock Market R&D VC as Market
GDP Spending
Investment Capitalization Spending % of Capitalization as
($ Billions) ($ Billions) GDP % of GDP as % of
($ Billions) ($ Billions)
Country GDP
United States $9,152 $122.1 $16,635 $243.5 1.33% 181.8% 2.66%
United Kingdom 1,442 12.2 2,933 25.8 0.85 203.5 1.79
Germany 2,112 4.4 1,432 50.3 0.21 67.8 2.38
Canada 635 4.3 801 10.0 0.68 126.2 1.58
Israel 101 3.2 64 2.8 3.17 63.6 2.78
Italy 1,171 2.8 728 12.2 0.24 62.2 1.04
Hong Kong 159 2.2 609 0.35 1.38 383.3 0.22
Sweden 239 2.1 373 8.8 0.88 156.4 3.69
Japan 4,347 2.0 4,547 141.7 0.05 104.6 3.26
Singapore 85 1.2 198 1.6 1.41 233.7 1.85
India 447 0.5 148 2.3 0.11 33.1 0.51
Venture Capital fund-raising worldwide
250
200
150
100
50
0
1989 1995 2000 2002
$billion
Venture Capital Fund-raising
$ Billions
250
200
150
100
50
0
1996 1998 2000 2002
120
100
80
60
40
20
0
1990 1995 1998 2000 2002 2003
in billion $
Average Investment Per Company
12
10
0
1995 2000 2002 2004
in million $
Historical Trend Data-By Quarter
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
0 5 10 15 20 25 30 Billions $
Qtr 1 Qtr 2 Qtr 3 Qtr 4
U.S. Venture Capital Investment by Industry:
1998 - 2003
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1998 2000 2002
% of total
High-technology investment trends
Top 20 countries based on high-tech investment
Venture Capital Fund-raising sources 1979-2000
160
140
120
100
80
60
40
20
0
1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 1999
-20
% Return
The pricing of Venture Capital Investment
12
10
0
1995 2000 2002
$billion
Asia Pacific Investment and Fund raising trends
Asia Pacific
Reasons for low VC investment in Asia
1. IP protection strategy