The PitchBook-NVCA Venture Capital Monitor for the first half of 2021 reveals that the market is set to break a number of investing records, but strikingly, the record levels of investment activity are all being set by the later stages of investment. At the other end of the funnel, activity is increasing, but not at the same pace as the overall market.
“The Achilles Heel of Reputable VCs,” a recent paper by Nuri Ersahin et al., finds that the most successful venture capital (VC) funds make fewer and smaller investments in states after investment tax credits go into effect. These VCs also co-invest with fewer firms, are less likely to invest in “serial” entrepreneurs and experience fewer positive exits after the introduction of the tax credit.
More special purpose acquisition companies (SPACs) have been formed in 2020 than in the last several years combined. These entities have helped some high-profile unicorns go public recently, including DraftKings and Nikola Corp.
The venture capital (VC) market appears to be another part of the American economy experiencing a "K-shaped" recovery, with some participants achieving new highs as others are ignored altogether.
"Finders," those who connect potential investors with issuers (e.g., startups seeking funding) within private markets, would not be required to register as brokers under recently proposed Securities and Exchange Commission (SEC) exemptions. Currently, individuals who work to connect investors and issuers — including simply providing issuers with a contact list and regardless of whether any advice is provided or whether the connection is made on behalf of one of the parties to any investment — may be required to register with the SEC as a broker.
A recent report by PitchBook indicates that angel investing is seeing fewer unique participants and a greater share of activity from groups than individuals. The same report provides an analysis of startup outcomes based on whether the company began with an angel or venture capital (VC) round and finds companies with angel backing initially look stronger but have a more mixed record over the long-term.
For the first time, individuals with defined measures of professional knowledge, will be allowed to participate in private capital markets without having to meet the traditionally required income or net worth levels. The U.S. Securities and Exchange Commission (SEC) has broadened the definition for who the commission views as an ‘accredited investor’ and a ‘qualified institutional buyer’.
The U.S. Securities and Exchange Commission (SEC) recently proposed rule changes that aim to make fundraising easier for new companies, including by expanding crowdfunding’s applicability and allowing for “demo day” communications. The changes target three particular methods of exemptions: Regulation A, Rule 504 of Regulation D, and Regulation Crowdfunding.
Concerns over national security have prompted the Treasury Department’s Committee on Foreign Investment in the U.S. (CFIUS) to force international investors to divest from two American tech startups, a move that will affect entrepreneurs and investors alike, according to a recent article by from Jeff Farrah of the National Venture Capital Association.
Based upon the finding of two reports – the 4Q Pitchbook-NVCA Venture Monitor and the MoneyTree Report – SSTI identified three significant trends that impact the startup capital community: geographic concentration, mega-rounds/funds, and strong VC-backed exit activity.