Venture Capital Firms, Startups Transform In Second Internet Wave
Marc Weiser, Managing Director, RPM Ventures
Since the dot-com bust in the late 1990s, venture capital investing has changed considerably. Today, venture-backed firms experience far fewer IPOs, mergers and acquisition activity has increased and startup valuations have returned to more traditional levels.More venture capital firms exist now and the average fund size is larger, so the average amount of capital being invested per company has increased.
While the median venture-backed company exit valuation via mergers and acquisition is now $40 million to $50 million, these companies are now raising $20 million to $25 million, up from $5 million 10 years ago. Thus, larger amounts of capital are funding the same early stage risk but seeing lower return multiples due to greater money supply.
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