Young, emerging growth companies looking to venture capital firms as an alternative to more traditional debt financing sources may experience stiffer competition.
VC investments declined for the first time in three years, according to a recentMoneyTree Report by PricewaterhouseCoopers LLP and the National Venture Capital Association (NVCA).
Overall, venture capitalists invested $26.5 billion in 3,698 deals in 2012, a decrease of 10 percent in dollars and 6 percent in deals over the previous year. The clean technology and life sciences sectors experienced the greatest drop off. Meanwhile, the software sector remained strong in 2012, with venture funding increasing 10 percent to $8.3 billion and deals up 8 percent.
According to the report, the stage of investment also shifted from seed to early stage in 2012. Investments into seed stage companies decreased 31 percent in terms of dollars and 38 percent in deals with $725 million going into 274 companies in 2012, the lowest annual seed dollars since 2003. The trend reveals that VC firms have started engaging with companies later in their life cycle than in previous years.
The report suggests that VC firms have become more discriminating when it comes to their investments. Given the uncertain economic times, they want to make certain that the risk will pay off. Therefore, it is even more important that companies put their best foot forward in written presentations and meetings.
For more information about what venture capital firms look for in a business opportunity, please see our prior post.
If you have any questions about venture capital financing or would like to discuss how it may benefit your business, please contact me,Dan Brecher, or the Scarinci Hollenbeck attorney with whom you work.
Supreme Court and Title VII: Implications for Reverse Discrimination
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]
Short Form Merger: Streamlining the Process for Businesses
Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]
Tariff Response Options for Small Businesses Facing Financial Distress
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
Common Causes of Partnership Disputes and How to Resolve Them
Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]
Businesses Are Facing Financial Headwinds—A Practical Guide
*** The original article was featured on Bloomberg Tax, April 28, 2025 — As a tax attorney who spends much of my time helping people and companies who have large, unresolved issues with the IRS or one or more state tax departments, it often occurs to me that the best service that I can provide […]
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