Venture capital data woes
Here's our story in yesterday's Merc about the steady rate of venture investing last quarter. The reports these days issued by the major venture capital statistics vendors should be taken lightly. The data has become a casualty of the competition between Venture Economics and VentureOne, which are locked in a quarterly competition to release their numbers first. As soon as a quarter closes, they run their tallies and rush out the numbers even though they know they'll get much better data by waiting a few more weeks. Did the amount of venture capital invested really fall during the 4th quarter, as VentureOne reported initially? No, it turns out, that quarter was up after numbers were revised recently. As for Venture Economics, they reported Silicon Valley companies had $1.7 billion in venture capital last quarter. But now, after revised numbers, it is $1.8 billion.
UPDATE: Dan Primack has some good analysis of quarterly VC investing trends here.
Another oddity to consider in the tallying is the precise definition of "venture capital". There are separate numbers for investment *by* "professional venture capital firms" and investment from all sources raised by companies that had previously received funding by professional venture capital firms.
I would also strongly note that like all other economic data series, one should not be overly concerned or jump to conclusions about one or even two data points in a series.
Better to expend your energy seeking out the causal mechanisms that actually influenced investment in any period of time (using a window of no less than nine months) than bicker over a relatively minor deviation from expectations in any particular reporting period.
-- Jack Krupansky
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