January 27, 2010 Leave a comment
by Elias Shams
According to the latest report from MoneyTree, Venture capitalists invested $163.4 million in DC-area companies during the fourth quarter, the highest total of any quarter last year, and more than double the amount invested during the first quarter. Despite the strong finish, however, the $539.6 million invested in local firms during the year was a 45% drop from 2008 levels.
I have a few friends in the area that killed the deal for not willing to give up a bigger percentage of their companies to the investors. The ideas were great….. The VCs were great….. the entrepreneurs just did not want to give up more at such early stage of their deal known as series A investment. I wonder how much of the 45% drop was as the result of such ongoing battle between the entrepreneurs and the investors?
The report on seed-stage financing was not great either, but still there were a few good signs – 2 percent increase in terms of $$$ , but not in terms of number of the deals I have no doubt the continuous seed-stage financings has a lot to do with the fact the investors know some of America’s most successful companies were founded during recessions. Historically, when times are bad for the economy, it can be a great time to start a business. 16 of the 30 companies that make up the Dow industrial average were started during a recession or depression. These include Microsoft, Disney, McDonald’s, General Electric and Johnson & Johnson. In fact, from what I remember, Although, Google started during the glory days of late 90’s, but it really started kicking ass during the 2001 recession. Read more…