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Venture capital firms raised $12 billion in the first quarter — the largest amount in 10 years and double the amount raised in the previous two quarters combined — despite growing doubts about startup valuations. The amount raised is a promising sign for entrepreneurs and startups that rely on venture capital funding to launch their companies and expand. The $12 billion was up 59% year over year and more than double that of the previous quarter, said the National Venture Capital Association, which reported numbers tallied by Thomson Reuters. It was the most raised in a quarter since $14.3 billion in Q2 2006. “While it’s unlikely for this strong pace to continue, we do expect this to be a solid fundraising year when all is said and done,” said Bobby Franklin, CEO of the National Venture Capital Association, in a statement. Investors in venture capital funds include pension funds, endowments, insurers, banks, corporations and rich individuals hoping to get above-average returns on their investments. Venture capital firms receive annual management fees as they invest in startups. The funded portfolios are typically active for about 7 to 10 years until profit is distributed to the portfolio investors. Venture capital firms also keep a percentage of the gains. The funding provided to venture capital firms comes even as the value of some highly valued startups has declined and as the market for initial public offerings has cooled. But the overall rate of return from VC portfolios is better than what it might seem. The 10-year return by venture funds for the period ended Sept. 30 was 11% versus 6.8% for the S&P 500 index and 7.9% for the Nasdaq composite, according to Cambridge Associates, a provider of investment advice and research. The largest recipient of funds in Q1 was Founders Fund VI portfolio, which raised $1.3 billion. The Founders Fund venture capital firm was launched by Peter Thiel, a founder of PayPal ( PYPL ) and an early investor in Facebook ( FB ). Founders Fund is an investor in SpaceX, which has a multi-billion dollar contract to resupply the International Space Station. SpaceX also has numerous contracts for the launching of satellites. Founders Fund is also an investor in accommodations listing provider Airbnb and music streaming service provider Spotify. The second- and third-largest funding amounts, both receiving $1.2 billion, went to Norwest Venture Partners XIII and Accel Growth Fund IV. Scalper1 News
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