While entrepreneurs looking for funds should be aware that venture capital is hard to get, the number of deals closed is declining. Here are factors that are shaping the venture capital industry and are likely to impact investments in the future.
VC funds raised a lot of money in 2016
One development that accounts for the recent drop in venture capital activity is the degree to which venture capitalists fundraised last year. They raised $41.6b cross 253 funds. This indicates that investors may become more active in the future.
Investors are more likely to invest in frontier tech
Virtual and augmented realities, artificial intelligence, the internet of things, drones, fintech, and 3-D printing technologies have been hot topics for years. It takes time to learn the new technologies, meaning that investors have been taking longer to close deals with startups in these new sectors.
Many VCs have not been able to cash out
While late-stage, early-stage and angel/seed activity declined last year, so did the exits. Whereas interest in new investment opportunities and last year fundraising might increase earlier stage activity, the late stages of venture capital life cycle are still backed up. A sluggish exit market is keeping more funds locked away than ever before.
Inside the Q2 2017 global venture capital ecosystem