Investments by venture capitalists in startups rose a meager 2 percent in 2005 despite a big jump in VC fundraising, a study said Monday, suggesting VCs are taking in more money than they can prudently invest.
Meanwhile, some 182 venture firms raised $25.2 billion from investors in the same year, up 46 percent from the $17.3 billion raised by 194 firms during 2004, according to figures from the National Venture Capital Association. That’s the biggest fundraising total since the boom.
「一方で、National Venture Capital Association によると2005年に資金調達したベンチャー企業182社の合計金額は$25.2 billion。2004年に資金調達したベンチャー企業194社の合計金額$17.3 billionと比べると46％増との事。」
Experts don’t agree on the effects of a venture overhang but some say it leads to irrational investment and a lower bar for investing. If too many startups get funding, the worry is competition kills off the opportunity for above-average returns.
The amount of money available for investment makes it more profitable to bet on later-stage companies. The investment size and subsequent payoff potential is bigger and many of the early risk factors are taken care of.
The biggest gains in venture spending went to retailers and consumer services. VCs upped their investment in retailers, such as Guild.com, almost 75 percent to $215.5 million in 2005, from $123.2 million the year before. Investment in consumer services increased 53 percent to $2.4 billion from $1.5 billion in 2004.