Last week, I was thrilled to speak at the Rice University Alliance Web 2.0 Forum. I have included the slides below that I used to articulate why there has never been a better time to start a company than today.
In researching the data for the presentation, I wanted to compare the current venture capital environment to the past. The conclusions I discovered were different than I expected and I had to change my presentation to accomodate it.
Over the past 2 years, I have accumulated 30 years’ worth of US venture and exit data from a variety of sources. With this, I built a slide comparing the 15 year median values of dollars raised (entering the system) and outcome values (leaving the system). The results are surprising.
Funds raised are down 44% while exits are on par or larger in dollar terms. The exit data is encouraging particularly in light of the dearth of exits from 2007 to 2009.
The funds raised figure is more complicated. There is no question the venture industry is shrinking, which should imply better returns for investors. With the decreased costs of starting a company as a result of elastic infrastructure, massive distribution platforms and a shift away from capital intensive endeavours like semiconductors, this may be the right correction in the market for the longer term.
Redpoint had a very active year with more than 20 new investments. We believe there has never been a better time to start a company.