by Courtney Fielding Venture capitalist William Quigley, managing director of Clearstone Venture Partners, will release his State of Venture Capital in America today. The 20-year-industry veteran details a VC community at a crossroads and poised for comeback after a rocky decade. But only the strongest firms survived the shakeout. While there were 712 active technology investors at the start of the decade, only 313 remained in 2009.
We caught up with Quigley at his Santa Monica office and asked the VC to explain to us just what the heck is going on in this cooky market and hand over some advice for internet-based startups looking to attract the remaining VC players.
Q. The U.S. economy has grown nearly 50 percent since 2000, yet there are half as many venture firms in existence today as there were in 2000. That’s pretty shocking. What’s the effect of that contraction on the market?
A. Well, our entire asset class was pretty much abandoned over the last decade. But it’s actually great for those of us left standing! We have half as many firms as we did as ten years ago. We also have far fewer assets under management than we did ten years ago — $225 billion in 2000 versus $179 billion in 2009. What that tells me is the venture market is really poised for some really great returns. Whenever there is less capital it will generate a better return.
Plus, there are far fewer venture capitalists, and especially far fewer experienced venture capitalists around today. The angel markets have been deployed, but I don’t think there is a substitute for an experienced VC within your company who has weathered multiple IPOs and can assist when M&A heats up. The ones who are there are going to win big.
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