U.S. Venture Capital Firms Invest $84 billion in Tech in 2017, Returns Slower Than in the Past

Mercury News article from earlier this week reported that, “Money to find the next big thing is flowing into Silicon Valley at the highest rate since the dot-com boom — and there does not seem to be a bubble in sight.

In 2017, U.S. venture capital companies dished out $84 billion to 8,000 technology startups and companies, the highest amount of capital seen since the early 2000s, according to an annual industry monitor from the research company Pitchbook and the National Venture Capital Association.

“But unlike before, when many venture capital companies lost their money when the dot-com bubble burst, both organizations noted a healthier ecosystem. One reason is that most of the $84 billion went to large, high-value companies with an established customer base rather than risky, early-stage startups.”

The article pointed out that, “However, venture capital companies are not reaping returns as fast as they once did. More and more venture-backed companies are deciding to stay private, and the number of companies exiting has dropped to 769 — the lowest since 2011. Exit value stayed relatively flat, thanks to the big returns seen from select IPOs such as Stitch Fix and Roku in 2017.

With companies opting to stay private longer than in the past, venture capital companies need more patience — and deeper wallets — than in the past.”

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