The team at OVP Partners in Seattle/Portland puts out a quarterly newsletter. In the most recent one, Charting the Course, they cut into the NVCA Yearbook numbers to get a better sense of what is going on with the consolidation in the industry. As I wrote in Fidelity Comes to VC, LP’s are driving a shake-up through choosing to invest in a core group of brand funds. OVP estimates that less than 50% of 2000 venture funds are still active. This number will continue to contract as funds wind down current investing and are unsuccessful at new fundraising.
"In 2000, there were 1156 different venture firms that made at least one new deal. In 2006, there were only 597. This is more like a 50% drop, not just 15%! We think that is the big, so far unwritten, story. The US venture industry has been cut in half. That certainly qualifies as a major shake-out."
Wow, that is pretty dramatic contraction!
What do you personaoly believe the future impact to be on startups seeking capital will be? Also will this cause a shift to or away from early stage investments in your opinion?
David, see my post following this one…