Venture capital markets: from Silicon Valley to Australia by ProQuest


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									 C A P I TA l m A r k e T S

         While the recent turmoil                       AFtEr CommENCINg Its plummEt in January
                                                        2009 to the lowest levels in a decade, the US stock
         within global capital markets                  market then rebounded less than six months later.
                                                        The Australian market fared slightly better with the
         has created an uncertain                       All Ordinaries Index finishing end-June higher than
                                                        in January. While this volatility in the public markets
         investment climate overall,                    associated with the global financial crisis (GFC) has
                                                        also negatively affected the private venture capital
         there have been some positive                  market, there have been some positive implications
                                                        for the industry as well.
         spin-off effects in the privately              Weaker results in recent months
         funded arena. Here we look at                  Three areas in which the GFC has negatively affected
                                                        the venture capital industry – as keenly observed in
         some of the GFC effects on the                 the US market – have been mirrored in the Australian
                                                        and Asian markets:
         venture capital markets both                        1. Fewer new investments are being made. In
         in the US and Australia.                       the first quarter of 2009, approximately US$3 billion
                                                        of venture capital was invested across 549 deals in
                                                        the United States. By comparison, US$7.7 billion of
                                                        venture capital was invested in the first quarter of
                                                        2008.1 The last time that less than 600 private
                                                        companies received venture capital funding within
                                                        a quarter was Q1 of 1996. Venture capitalists in

                                 trIstEN lANglEy F Fin is an Investment Director with Southern Cross Venture
                                 Partners, working out of the Sydney and Palo Alto, CA offices.


46       INFINANCE august 2009                                            the magazine for Finsia members
                                                                                                             C A P I TA l m A r k e T S

                                                         5                                                                           90
Silicon Valley agree that the pace of investment is 4          Figure 1. Australian IPOs by quarter (A$)                             70
simply slower. Since the start of 2007 approximately                                                                                 60
                                                               5                                                   90
US$62 billion has been invested in first round and 3
                                                                                                                   80                50
follow-on financings across 8,400 companies. At this
                                                   $bn          4                         
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