Tags: Sanwal | venture | capital | frothy

CB Insights' Sanwal: Venture Capital Market Getting Frothy

By    |   Friday, 11 April 2014 10:40 AM

The venture capital (VC) market is approaching bubble territory, with both VC funding and VC-backed initial public offerings (IPOs) soaring in the first quarter, says Anand Sanwal, CEO of VC research firm CB Insights.

VC funding totaled $9.99 billion (for 880 deals) in the first quarter, the highest amount since 2001, according to CB Insights. Internet companies made up almost 50 percent of those deals, followed by the computer hardware, services and mobile communications sectors, CNBC reports.

"Most of this frothiness is tech-centric," Sanwal tells CNBC. "The biggest thing is these new billion-dollar-valued companies and the rise of these mega-rounds. It was almost weekly that we saw a $100 million round."

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Last quarter, 11 tech companies receiving their first round of VC financing were valued at $1 billion or more, according to CNBC. In 2013, it took all year for that accomplishment.

As for VC-backed IPOs, there were 35 in the first quarter, the best showing since 2000, according to CB Insights. The tech sector represented 37 percent of those offerings.

If tech stocks keep dropping, as they have recently, IPOs may shrink, Sanwal argues.

"A lot of this can be driven by public markets, especially on the IPO side, but given the pullback in tech stocks, if that continues it makes it difficult for prospects looking to IPO," he explains.

The tech-heavy Nasdaq Composite index plunged 3.1 percent Thursday.

Meanwhile, one of the country's most powerful venture capitalists, Marc Andreessen, co-founder and partner of Andreessen Horowitz, remains bullish on the bitcoin, despite the digital currency's recent turmoil.

"I'm completely unfazed and plan to invest more," he tells The Wall Street Journal. Andreessen Horowitz has invested about $50 million in the bitcoin sector, which is thought to be more than that committed by any other investor, the firm told The Journal.

Editor's Note: 18.79% Annual Returns ... for Life?

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InvestingAnalysis
The venture capital (VC) market is approaching bubble territory, with both VC funding and VC-backed initial public offerings (IPOs) soaring in the first quarter, says Anand Sanwal, CEO of VC research firm CB Insights.
Sanwal, venture, capital, frothy
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2014-40-11
Friday, 11 April 2014 10:40 AM
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