Here's some good news for the limited partners of all those 1999-2000 vintage funds from the tech bubble: The survivors of the shakeout are not doing as bad as one might think.
A research report by SVB Analytics says that companies started during the 2000 bubble era account for one-third of all private technology companies operating today. They were long considered the "walking dead" -- startups that raised huge sums at sky-high valuations and are limping along. But for the survivors, it's not all that bad. The report says that 70% of this generation of companies has received fresh funding within the last three years, and they "are playing a significant role in investment portfolios and dominating technology merger and acquisition activity."
For VCs, however, the picture isn't as bright. While these portfolio companies have clearly benefited from late-stage investing that's taken place in the last few years, it's still not clear that venture funds are making a profit on these investments after multiple rounds. SVB estimates that in the second quarter of 2007 that "almost half of mergers and acquisitions with disclosed values produced total consideration for the sellers less than the total venture investment."
LPs will just have to wait and see if the late-stage trend was worth the trouble, or if they've just been throwing good money after bad. - George White
Read the SVB Analytics report
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