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Written on 20th January 2009
1 COMMENT 
Mircea Goia, Next Web US Webtipr
Now, there are many bad news out there regarding this crappy economy (there are also some good news too: here and there).
This is another one on top of the bad news list and regards to “oil” which makes up part of the economies function (at least in US): venture capital.
National Venture Capital Association reports (according to Reuters) that in Q4 the fundraising dropped about 71% from the same period in 2007 (3.8 billion vs. 11.7 billion in Q4 2007) and a substantial decline comparing with Q3 2008.
For the whole year 2008 the funds raised were in amount of $28 billion comparing with the year prior ($35 billion).
The champions of venture capital funds in 2008 are Sequoia Capital ($929 million raised), Austin Ventures ($900 million raised), Essex Woodlands Health Ventures Fund ($892 million raised). There were 18 funds that raised worth $500 million or more.
There were only six IPO exits last year (the worst in 30 years), 260 M & A transactions (the worst in 5 years).
The largest IPO of 2008 was Rackspace Hosting ($187 million). All but one of 2008 IPOs are trading below their offering price.
The largest M & A transaction of the year 2008 was EqualLogic, Inc, a developer of storage area network solutions, which was purchased by Dell, for $1.4 billion in January (the largest of the Q4 was the purchaing of Bill Me Later, online payment solutions provider, by eBay – $945 million).
“The most significant impact of the US financial crisis on the venture capital industry has clearly taken place in the exit markets,” said Mark Heesen, president of the NVCA.
As it looks now, the trend could continue in 2009 also until the exit markets re-open and the pipeline is cleared. Let’s hope that pipeline is cleared sooner rather than later.
How are the things in Europe?
Written on 4th September 2008
3 COMMENTS
Ernst-Jan Pfauth, editor in chief
The day before yesterday, rumors spread around the web about this year’s biggest tech IPO. Russian search engine Yandex wouldn’t want to go to NASDAQ this year, due to the unstable political situation in Russia. During a press conference, Russia’s most important investor sort of canceled the deal. As it turns out, it was a nice piece of wishful thinking. The Yandex IPO plan is still on track.
The Russian Internet insider news site Roem.ru reported that Finam just announced its market expectation. It wasn’t official information from Yandex. I guess things got messed up because of language barriers, and Profy got the wrong information. The high numbers mentioned in the post, an IPO of around 3 to 5 billion dollars aren’t correct either. We’re still talking about a $2 billion IPO on NASDAQ in fall 2008.
Written on 2nd September 2008
2 COMMENTS
Ernst-Jan Pfauth, editor in chief
With the upcoming $1.5 billion to $2 billion IPO of Yandex, certainly the biggest tech IPO we would have seen in a while, the Russian search giant got a fair amount of attention lately. The Times published an (somewhat boring) interview with the founder, the blogosphere commented en masse on this story.
Some bloggers wondered whether Yandex would really consider to enter the stock market this fall, given the Russian-Georgian conflict. Would investors be willing to put their money where the war is? Turns out they probably don’t, because Yandex won’t take the bet this fall. 2009 will be the year of the IPO.
Profy notes this has allegedly been announced during a press conference, organized by one of the leading Russian investment funds – which is known for its multiple investments in IT companies. The valuation has become higher though, as it now circles around 3 to 5 billion dollars.
Meanwhile, Quintura reports about a funny follow up on Google’s act of desperation on the streets of Moscow. World’s largest search company spent half a million dollars earlier this year on billboards. Yandex now has its own version, called “Any Questions?”. Cool detail, users can create their own billboards. Here’s my try:
Written on 21st May 2008
2 COMMENTS
Ernst-Jan Pfauth, editor in chief
About a month ago we reported that the Russian search engines were on their way to enter the regions of world’s largest search engines, comfortably next to Google. The CEO of visual search engine Quintura Yakov Sadchikov keeps us up to date by emailing the latest on Europe’s third search market. Well, today is one special day for the Russian search engines: leading party Yandex is preparing for an IPO on Nasdaq this autumn and plans to raise $1.5 billion to $2 billion.
Yandex office: Dmitry Ivanov, head of development; John Boynton,
board member; Arkady Volozh, CEO
A few days ago, Yakov told us that studies from comScore learned Yandex was ranked third in Europe ahead of both Yahoo and Microsoft with 528 million or 2.2 percent of European searches in March 2008. In the same report, comScore said Eastern European search properties “will likely to gain traction and grow market shares”. So today, a news report about Yandex’ IPO from Reuters confirmed comScore’s prediction.
The expectations of raising up to $2 billion are based on a previous valuation of Yandex, which pinpointed the value of the engine on a staggering $5 billion. Erick Schonfeld from TechCrunch reported that – when taking the ranking of Yandex in account – its revenues are not that large: “in 2007 it reported only $167 million in revenues, which was a 130 percent increase from 2006″. It’s probably the promising character of the Russian tech market that drives the high valuations.
Yandex’ march to Times Square is not the only IPO news from Russia today. The largest Russian free web mail provider and portal Mail.ru heads to London for an IPO that would value the company at $2 billion, reported business daily Kommersant today.
Written on 6th February 2008
3 COMMENTS
Ernst-Jan Pfauth, editor in chief
Last year, start-ups had a hard time seducing European venture capital firms to invest in their companies. VentureBeat reports that the VC’s are backing the fewest companies on record since research group VentureSource began tracking investments in 1999.
Only 897 companies were able to woo investors. Yet when they did, it certainly paid of. Since when European VC’s do invest, they are putting in higher bets than they did previously. They invest an amount of 4.56 billion euro in total, a two percent rise from 2006.
In Europe it’s more difficult to turn a company into a profitable business
It’s the fourth year of consecutive increase in the amount of money, yet this has not necessarily has to be a positive thing. Since VentureSource says that in Europe it’s more difficult to turn a company into a profitable business. Therefore VC’s have to keep investing to make sure that the start-ups become success stories.
The statistics of the European market for mergers and IPOs are a bit horrifying. In 2006 89 venture-backed companies went public, in 2007 this number dropped to 38. Moreover, mergers and acquisitions deals fell 38 percent to 136. Again, VentureSource can draw a sad conclusion: it’s the lowest figure of the past ten years.
The US economy seems to be in trouble, with the growing threat of a recession, yet the merger market was pretty strong.
Although this article is discussing differences between European and American markets, I reckon we should think in terms of best of both worlds. There’s more risk capital available in America and they have a better exit environment. But most American companies stick to their (huge) local market and their own language. European entrepreneurs and VC’s are more used to be working with language barriers, but less risk capital is available.
When we combine these two markets, the available cash, the network of the VC’s and the knowledge and talent of entrepreneurs,, chances of success are bigger. European investors already often look for an American partner in the series B. Let’s keep that up. On the web the world is flat, the only barrier we still have to take is language.
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