Over the last 2 years or so Venture Capitalists have become more aggressive in finding desirable early stage companies that meet their investment criteria. While they are hoping for the next Google, more realistically they are finding the first XenSource - the open source virtualization company featured in this New York Times Business article: Fighting to Get in on the Next Little Thing.
"We're hearing much more about elbows being thrown, especially if you're talking to people in Silicon Valley," said Mark G. Heesen, president of the National Venture Capital Association. "There's a lot of competition out there." And venture capitalists are once more showcasing their successes and providing references to entrepreneurs they want to impress.
Any number of Silicon Valley venture capitalists will attest to the new competition, including Tod H. Francis, a managing director at Shasta Ventures on Sand Hill Road. "Over the last six months, we've seen a general increase in activity," Francis said. "And we fully expect there will be another jump in activity as we move into the fall."
For those firms seeking to raise money from the venture community, this is a positive development. As recently as 2 years ago pre-revenue start-ups had the proverbial chance in Hades of even getting an audience. For VCs it means more proposals to vet and more meetings with aspiring founders and executives. The lack-luster rate of liquidity events are still a concern for both parties engaged in the negotiation, but the interest being shown and competition to be part of deals is a favorable trend for both the VC ecosystem and founders seeking financing.
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