Matt Marshall at SiliconBeat mentioned that now is the time to raise money after seeing the data from the latest VentureOne report. In essence, Matt contends that VCs are deploying more cash than they have in 4 years...and the competitive dynamics are leading to higher pre-money valuations (i.e., more money from the VCs for a smaller piece of the ownership).
I agree with his point, and know from personal connections in the VC business that the market has become significantly more competitive of late. One deal [that shall remain nameless] that I was consulted on during due diligence process with a VC colleague, garnered 12 term sheets recently. TWELVE TERM SHEETS [and believe me, this was no Google 2.0]. Anecdotes aside, the VentureOne data seems to confirm my suspicions in a broader sense.
But the bigger story here is that EXCESS CAPITAL PERMEATES THE ENTIRE ECOSYSTEM. This isn't simply a VC phenomenon.
- The Nasdaq Composite is near 4-year highs
- Technology companies [particularly software firms] are sitting on mounds of cash
- Google has a $120B market cap
- Tech-focused LBOs are cropping up with greater frequency
The bottom line is that regardless of whether you see a "bubble" in the private equity markets or whether you think the public equity markets have further room to run, this is a fantastic time to be a technology entrepreneur.