US Venture Trends

By Victor H. Boyajian

The pace of venture investment continues. Except for a few notable exceptions however the froth on valuation is off.  Fewer venture firms are willing to chase deals and bid up valuations with “irrational exuberance”.  So while the pendulum has swung back in this regard there is a good amount of capital to be deployed.  In key markets beyond the San Francisco Bay Area such as NY and London there has been a notable increase in new funds willing to deploy capital. West coast funds are continuing to look beyond their home turf for investment opportunities in sector relevant categories.  And there is strong appetite to tapping into Asia for growth opportunities and funding.  To better assure success joint venture partners are being sought out in China.

Most notable has been the interest in US based companies in global expansion opportunities. In the past few years it is not unreasonable to see some of our smallest venture backed tech companies consider expanding abroad to Europe or Asia. And of course companies outside the US continue to  figure ways to tap into the talent pool, customer market and venture dollars.  The key for companies entering US markets is to manage the significant increase in burn.

M&A activity continues a pace. Equity capital markets are not an encouraging exit path at the moment.   Critical to bring on board funds that can support future raises. Many companies are looking at ways to bridge financing needs in the later stage. Will Reg A plus get wings? Brexit has not seemed to have had a significant dampening effect.