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Venture firms are growing; where are the boutique VCs?

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Jeff Hindenach
The median size of venture capital firms is growing.

So are the small boutique firms going extinct? Those with one or two partners, who want to invest $1 million or so, and really get into the trenches with the entrepreneurs they support? We write about this increasingly rare species in this Mercury News story. We mention the latest moves in Silicon Valley by Alsop-Louie, Geneva Ventures, Ridgelift and several others. In part, angels are stepping in to fill the void -- and so you're seeing large angel rounds like those of Kaboodle and StumbleUpon.

You'll also see links to our quarterly venture capital survey, which can be good for people (job seekers, etc) keeping track of companies getting funded here in Silicon Valley, along with links to previous reports.

In Europe, the median size of VC firms grew to $50 million in the first quarter, up from $32 million for all of last year -- and so firms are still relatively small there. But here in the U.S., the median sized fund has rocketed past $200 million. The data comes from VentureOne, a unit of Dow Jones.


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Comments

An excellent report on the current VC scene, Matt. Thank you.

Nag @
Startups.in

Startups.in on May 18, 2006 8:08 AM
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I attended a financial informational session few months back by the folks who organize an entrepreneur contest known as The Carolina Challenge where the sexiest business plan submitted gets some $30,000.

I remember distinctly in that presentation how the guy presenting seemed to have little idea about VCs. At one point, he said something to the extent "there are only few VCs in the world."

Essentially the guy made getting a VC seem like climbing Everest. Now these were not your 17-18 year old high school guys in the audience. Many of these were business students with genuine interest and dedication to some very good ideas.

From a VC's point of view, it seems like an untapped market: very few VCs seem to scout for serious ideas & talents at the university level. Yet everything from Microsoft to Google have founders behind them that have acknowledged the role of being at a university in their success.

VCs typically have a lot to gain and little to lose when they invest in collegepreneurs. Usually these bright individuals in universities are ready to give up good stake for very little money -- at least relative to the kind of money those VCs throw around in shabby investments they make with "known entrepreneurs in the Valley" and such.

I bet when Google would being built before release a VC could have offered a mil for a good chunk in the company. Or more practically, lets say the VC invested in 20 collegepreneurs $500,000 each for 50% stake. I've a feeling it wouldn't be too bad an idea when compared to investing in $10mil in a company that can either go big or bankrupt in 6 months.

-Zaid
http://cardboard.typepad.com

Zaid on May 18, 2006 10:15 AM
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Matt, thanks for the piece. If you haven't already, check out Peter Rip's blog on what's wrong with the VC industry which is on a parallel path but comes at it very much from the investor side of things:

http://earlystagevc.typepad.com/earlystagevc/2006/01/traditional_ven_3.html

mike zimmerman on May 18, 2006 6:16 PM
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