Elizabeth Wainger (MAVA)
301.340.6831 or 301.254.1190
liz@lizwaingercommunications.com
Survey Reveals VCs Have Called a Time Out But Are Still Active Investors
(Vienna, VA, May 18, 2001...) Mid-Atlantic region venture capitalists are heavily engaged in "triaging" their existing portfolio companies but have not lost their appetite for new deals, according to a new survey, released today by the Mid-Atlantic Venture Association (MAVA). The results were presented at Venture Outlook, a quarterly event MAVA hosts to bring together entrepreneurs, venture capitalists and analysts to delve more deeply into the story behind quarterly investment numbers
More than a third of the venture capitalists surveyed said they are spending between 60% and 80% of their time on their portfolio companies and about 25% of their time looking at new deals in 2001. In 1999 and 2000, it was just the reverse. Three-quarters of the survey respondents said that they have one to two new qualified deals in the pipeline that they could potentially close in the second quarter of 2001. While two-thirds noted that that number is fewer than last year, 27% said it was about the same, and 11% said it was higher than last year.
"There's no question that the pace of venture investing in the region has slowed, but it hasn't come to a grinding halt," said Larry Macks, a MAVA Board member and Partner at Boulder Ventures. "People are doing fewer deals but the deals that are getting done are solid," he said.
The survey reveals that there is plenty of capital available in the region to invest in new deals. More than 50% of respondents said they have between $10 million and $100 million available for new deals, and 11.2% said they have between $300 million and $1 billion to invest in new deals. However, firms expect to invest less than 20% of that capital in new deals 2001.
Survey respondents also point out a benefit of the more challenging investment climate: more rational valuations. Seventy-five percent of respondents said that pre-money values of companies funded this year compared to last year will be down more than 40%.
"Many venture capitalists are finding this to be an excellent time to invest because valuations have become more reasonable," said Macks.
The survey on changing venture investment approaches is the second in a series of quarterly surveys MAVA conducts to better understand the investment climate in the Mid-Atlantic region. The email survey was conducted between April 24 and May 9. It was sent to 290 venture capitalists throughout Maryland, Virginia and the District of Columbia and received a nearly 20% response.
Founded in 1986, The Mid-Atlantic Venture Association fosters the development and growth of business enterprise by creating a forum for the interaction of the providers of private equity, their service providers, and successful entrepreneurs in the Mid-Atlantic region. MAVA's members represent 65 percent of the venture capital firms in the Mid-Atlantic and have more than $10 billion under management.
