There has been a huge drop in venture capital activity in the UK over the past two years, with the number of exits falling by 40 per cent and the total amount of VC raised falling by 50 per cent, according to new research by the National Endowment for Science, Technology and the Arts (NESTA).
‘Venture Capital: now and after the Dotcom Crash’ compares current venture activity trends withwhat happens after the dotcom crash, and finds this crisis has been compounded by the challenges facing entrepreneurs since 2002.
In particular, two new trends affect today’s market:
- The time taken to successfully exit, through a floatation or takeover, is getting longer. Across the world this averages almost seven and a half years, the longest period seen over the past two decades. This global trend is reflected in the UK market and is making it harder for funds to attract further investment.
- Both the dotcom bust and the current financial crisis resulted in a significant reduction in the number of new venture capital funds established. Current fundraising activity is considerably lower than levels seen after the dotcom crash and stands at the lowest level seen in the last decade.
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Author: Science Business