Those of you considering venture capital investment in your business should read on to see the trend reported by Urvaksh Karkaria, Staff Writer at the Atlanta Business Chronicle. Equity investment remains a viable option for veteran entrepreneurs.
Karkaria writes ---Venture capital invested in Peach State companies last year was the highest in a decade.
Georgia companies scored nearly $495.85 million in venture dollars, up from $384.47 million the prior year, according to the MoneyTree Report, published by PricewaterhouseCoopers LLP and the National Venture Capital Association (NVCA), based on data from Thomson Reuters. The number of venture deals — 59 — was up 44 percent from the prior year.
Rising valuations, coupled with increased exit activity, is fueling venture investing in Georgia and nationally, said John Nee, partner in PwC's Atlanta technology practice.
Nationally, 2014 saw 47 "megadeals" — those that involved $100 million-plus venture capital raises. In 2013, 16 megadeals were completed, nationally, Nee said.
Valuations are rising as companies expand globally, increasing their capital needs and their growth potential. Strong exit activity — IPOs and mergers — is also fueling venture investing. Venture capital investors make money when their portfolio companies are either acquired or go public.
Last year, 637 VC-backed companies were acquired and more 100 firms went IPO, together up more than 40 percent from last year, according to DLA Piper.
A surge of non-traditional investors in venture capital deals is driving up competition for deals and, in turn, valuations.
"Private equity in previous years invested in late-stage companies," Nee said. "We're seeing (private equity) now entering at earlier stages."
At Fulcrum Equity Partners, deal flow last year was up about 8 percent year over year. The Atlanta-based venture firm did nine new and follow-on investments in 2014, compared with five the prior year, partner Jeff Muir said.