Things aren’t looking so good for venture capital. Investment by venture capital firms is at its lowest level in years. Investment into VC firms isn’t doing much better. But a new report says there’s still plenty of private equity money (which includes venture capital), waiting to be invested — in fact, the private equity “overhang” (the difference between funds raised and money invested) stood at $400 billion as of April, an all-time high. [Update: Apparently my reading comprehension sucks. This just covers later-stage and buyout deals, not early-stage venture capital.]
The report comes from the Alliance of Merger and Acquisition Advisors and research firm Pitchbook Data. The gray part of the chart below shows the cumulative overhang over the last decade — it seems to have grown steadily, with a dip in 2007, followed by a spike last year, and continued growth in the last few months. That means funds are still sitting on a whole lot of so-called “dry powder,” which will presumably be ignited when if they find the right investment opportunity. Clearly, most firms aren’t parting with that money lightly, but at least it’s there to be had.
As for when that money might actually get invested, in the press release AM&AA Board Member and Mosaic Capital Managing Director David Cohn says that we may see investors taking a closer look at deals this summer. This could lead to investment growth in the fall.
[image:Corbis; chart:Pitchbook Data]