Venture Investors less keen on Tech Start-Ups


Private technology firms are not the blue eyed darlings of venture capitalists anymore. The latter, although flush with cash, are not interested to give it to the tech companies as before. This does not mean technology privates are set out to dry. They still lead total Venture Capitalist investment universe, but with a noticeably lower footprint. According to Heath Terry of Goldman Sachs Group, A number of other industries, like healthcare, energy, industrials, consumer and financials attract about 40 percent of the total VC investment.

Cash rich

Goldman has pointed out that readily available cash is more plentiful than ever before. This is the reason technology start-ups will not suffer any considerable decliners in terms of dollars. However, it also means that Goldman will shift its attention on newer kinds of Venture Capital reports like financials and healthcare. These sectors will gain. According to a report by one Goldman Sachs analyst, the fact that VC funds collated a massive $64 billion as global capital and $121 billion more in venture funds, it is only to be expected that levels of forward activity will only increase with time. Analysts working at Goldman Sachs wrote that the funds collected a total of $64 billion in 2017. To compare, the same funds collected $55 billion in 2015. This amount comes despite many firms trying to cash out or exit their earlier investments, dropping 24 percent from their 2014 peaks.

International funding

Another investment is also noticeably shrinking: the share of the United States in global VC investing. Asia has seen a meteoric rise in this regard. It made up 38 percent of the international Venture Capitalist investing landscape during end 2016. To put in perspective, it was only 11 percent in 2013.  One reason for this is that the average deal size is larger. Start-ups were given larger sums of money compared to their United States counterparts. The start-ups like Xiaomi Corp and Didi Chuxing collated in excess of $1 billion during their individual funding rounds.

Goldman Sachs pointed out that even though the United States centric Venture Capitalist investments continue to represent majority portion of total international Venture Capitalist funding, the Asia Pacific cluster region gained considerable share when examined on yearly basis from 2012. It is to be said that Goldman Sachs has a division solely for investing in start-ups. It has financed a number of prominent ones like Spotify Limited, Honest Dollar, the retirement firm, thredUP Inc and Pinterest Inc.

Leave a Comment