Private Equity – Beyond Traditional Venture Capital
Summary
I have noticed this issue lately in the reporting on venture capital funding in the US and wonder if an alternative view of the data would lead to different choices in how companies raise private equity. Perhaps the largest source of data on venture capital (VC) is the PWC Money Tree Reports, which provides break outs by industry and geography as well as overall numbers. While the data supports a significant increase in private equity raised, a closer look at the numbers suggests that the bump isn’t due to traditional VC. The analysis of the two biggest financings to date in 2011, totaling $300M, revealed that the source of equity wasn’t traditional VC but big biotech as well as private individuals (or entities representing them). My goal isn’t to project trends in the composition of financing entities going forward but from a company perspective the data underscores the need to be flexible in sources of private equity funding for innovation.