38 ms·

522 exits of VC-backed companies in 2011, total: $53.2bn

44 points by speedracr 15y ago

vm 15y ago
This significantly understates the numbers because it doesn't include secondary transactions, which are increasingly common for founders and early investors. This was most interesting: the median acquisition price is now $71M (up 77%) with 5.3 years to liquidity. Takes lots of time but potentially incredibly lucrative The original release has better data: http://www.dowjones.com/pressroom/releases/2011/01032012-VCExits-0172.asp http://www.dowjones.com/pressroom/releases/2011/01032012-VCE...
- cperciva 15y ago
  Did you really just say that 5.3 years is a long time?
- nwatson 15y ago
  Lucrative for founders, I suppose, probably decent return for VC's. For early employees, not so sure. Going on eight years (7.5 years for me personally) on current company, wondering whether it's worth it.
scottkduncan 15y ago
It's interesting to see a decline in the total value of deals in Q4, despite the fact that both Groupon and Zynga had their IPOs in that quarter. I wonder whether there's any seasonality that typically affects these transactions or whether there was a bit of a slowdown from the previous few quarters. It's also interesting that only $5.4 billion, or roughly 10% of the total value of deals, came from IPOs during the year. For all the attention IPOs get, most of the money is coming from somewhere else.
jpdoctor 15y ago
Forget the exits. The bigger problem is that the VCs were not earning their keep: (2010) http://hbr.org/2010/07/the-vc-shakeout/ar/1 http://hbr.org/2010/07/the-vc-shakeout/ar/1 10-year IRRs are negative during the period that Google went public! The customers of the VCs (primarily pensions and endowments) are beginning to look with jaundiced eyes...
- vm 15y ago
  10 year returns across the Nasdaq Composite and S&P500 were garbage during that time. It's not just VCs. Everything is correlated. S&P: -20% (2000-2009), -3& (2001-2010) Nasdaq: -40% (2000-2009), +4% (2001-2010) (google finance)
  - jpdoctor 15y ago
    > 10 year returns across the Nasdaq Composite and S&P500 were garbage during that time. It's not just VCs. Everything is correlated. That's the problem: They are not supposed to be, or certainly not a coefficient of 1. So the portfolio managers are wondering, Why the hell am I paying 2 & 20 for something I can get in an index?
    - doyoulikeworms 15y ago
      Truthfully, why does anyone buy any particular asset expecting to do better than the market? The short answer, I think, is that they perceive the information and access that they have to be relatively great enough (than other market actors) to eek out an edge over the market. People's perceptions aren't always right, and the very definition of recessions (something that happened once or twice in the last "decade") is that entrepreneurs make a cluster of errors all at once. As for the "why," I'm sure a particular's VC's perception of a startup investment falls favorably on their own risk-reward scale, and is perceived to be in line with the time horizon for their investment (whatever that may be). To believe them or not is up to you, and is the result of your own perceptions given the information available.
      - jpdoctor 15y ago
        > Truthfully, why does anyone buy any particular asset expecting to do better than the market? The portfolio managers do not. They want a basket of assets, ideally with an expectation value and standard deviation. Read up on Modern Portfolio Theory, which is a typical entry point on portfolio management, if you are curious why expecting to do better than the market is irrelevant. (Despite the name, MPT is not very modern.) Edit: Note also, when I said portfolio manager above, I meant the customers of the VCs, not the VCs themselves.

44 points by speedracr 15y ago

vm 15y ago

This significantly understates the numbers because it doesn't include secondary transactions, which are increasingly common for founders and early investors. This was most interesting: the median acquisition price is now $71M (up 77%) with 5.3 years to liquidity. Takes lots of time but potentially incredibly lucrative The original release has better data: http://www.dowjones.com/pressroom/releases/2011/01032012-VCExits-0172.asp http://www.dowjones.com/pressroom/releases/2011/01032012-VCE...

cperciva 15y ago
Did you really just say that 5.3 years is a long time?
nwatson 15y ago
Lucrative for founders, I suppose, probably decent return for VC's. For early employees, not so sure. Going on eight years (7.5 years for me personally) on current company, wondering whether it's worth it.

scottkduncan 15y ago

It's interesting to see a decline in the total value of deals in Q4, despite the fact that both Groupon and Zynga had their IPOs in that quarter. I wonder whether there's any seasonality that typically affects these transactions or whether there was a bit of a slowdown from the previous few quarters. It's also interesting that only $5.4 billion, or roughly 10% of the total value of deals, came from IPOs during the year. For all the attention IPOs get, most of the money is coming from somewhere else.

jpdoctor 15y ago

Forget the exits. The bigger problem is that the VCs were not earning their keep: (2010) http://hbr.org/2010/07/the-vc-shakeout/ar/1 http://hbr.org/2010/07/the-vc-shakeout/ar/1 10-year IRRs are negative during the period that Google went public! The customers of the VCs (primarily pensions and endowments) are beginning to look with jaundiced eyes...

vm 15y ago
10 year returns across the Nasdaq Composite and S&P500 were garbage during that time. It's not just VCs. Everything is correlated. S&P: -20% (2000-2009), -3& (2001-2010) Nasdaq: -40% (2000-2009), +4% (2001-2010) (google finance)
- jpdoctor 15y ago
  > 10 year returns across the Nasdaq Composite and S&P500 were garbage during that time. It's not just VCs. Everything is correlated. That's the problem: They are not supposed to be, or certainly not a coefficient of 1. So the portfolio managers are wondering, Why the hell am I paying 2 & 20 for something I can get in an index?
  - doyoulikeworms 15y ago
    Truthfully, why does anyone buy any particular asset expecting to do better than the market? The short answer, I think, is that they perceive the information and access that they have to be relatively great enough (than other market actors) to eek out an edge over the market. People's perceptions aren't always right, and the very definition of recessions (something that happened once or twice in the last "decade") is that entrepreneurs make a cluster of errors all at once. As for the "why," I'm sure a particular's VC's perception of a startup investment falls favorably on their own risk-reward scale, and is perceived to be in line with the time horizon for their investment (whatever that may be). To believe them or not is up to you, and is the result of your own perceptions given the information available.
    - jpdoctor 15y ago
      > Truthfully, why does anyone buy any particular asset expecting to do better than the market? The portfolio managers do not. They want a basket of assets, ideally with an expectation value and standard deviation. Read up on Modern Portfolio Theory, which is a typical entry point on portfolio management, if you are curious why expecting to do better than the market is irrelevant. (Despite the name, MPT is not very modern.) Edit: Note also, when I said portfolio manager above, I meant the customers of the VCs, not the VCs themselves.