From DigiDay:
The venture capital market is slowing, but some investors are saying that’s a good thing — for them.
During the pandemic, VC money was getting thrown into the market and competing for opportunities for investment. Now, the VC market is correcting itself: company valuations are down, and less competition means smaller VC firms can be more deliberate with their investments. However, this also means it’ll be more difficult for media companies looking to raise capital to do so.
According to data from capital market research firm PitchBook, U.S. venture capital deal activity in “publishing” companies (defined as providers of print and internet publishing services, such as newspapers, magazines and books), was $25.2 million in Q3 2022, down from $84.4 million in Q3 2021 and $85.4 million in Q3 2020.
However, that’s up slightly from Q3 2019 at $25 million, but down from Q3 2018 at $85.3 million.
As for deal count, that’s also dipped in Q3 2022 to five deals in the quarter. In Q3 2021, there were 16 deals, and in 2020 there were 13 – the same number as in Q3 2019. It was 15 in 2018.
As of Nov. 1, 2022, the total value of VC deals for publishing companies this year was $117.4 million. While it’s not a complete comparison since there’s another quarter to go, total deal value was $484.5 million in 2021; $241.8 million in 2020; $511.6 million in 2019; and $208 million in 2018. Total deal count ranged from 51 in 2018 to 65 in 2021; it’s 35 so far in 2022.
The biggest U.S. VC deal among publishing companies in 2022 was a tie between news aggregator Flipboard’s $25 million Series A funding round led by K2 Global in July and Semafor’s $25 million seed round in June. Crypto publisher Decrypt raised $10 million in a Series A funding round in May. Lava Labs and Grid also raised $10 million this year.
Link to the rest at DigiDay
Over the rest of the decade investment capital will be in short supply as the last boomers retire and look to move their resources into conservative vehicles. Factor in high inflation and high interest rates on treasuries and commercial loans that might range as high as 9% mortgages and worst of all, the rebuilding of US manufacturing sucking the bulk of available capital and media funding is going to be near the end of the line for the leftovers.
So yes, it is only the smallest of VC groups that publishers can go to, the ones unable to play with the big boys.
Which, given commercial publishing’s inflated sense of self-worth (and monetary value), sounds like a good thing in the first place.
OTOH, I find it hard to believe that the usual screw-up rate for venture-capital acquisitions (about 75%), or of VC-imposed management (more than 80%), would be higher than that of commercial publishing…
That 20-25% is higher than I thought. I vaguely recall a 10% success rate is optimal in the tech world.
They must be doing something wrong. Too conservative.
The best take the biggest risks and earn the biggest rewards.
Like the guys behind these:
https://www.youtube.com/watch?v=yNP8by6V3RA
A couple billion at risk among the three but trillions to be made if they succeed.
A billion here, a billion there, and pretty soon you’re talking about real money.
Those 20-25% figures were of companies that went public with a full share offering, which is a nonrepresentative (but still illustrative) subset.
Full share? They flipped the thing? Cashed out?
Both, the key point being that it required SEC registration. And remember, too, that the subset concerns only companies in which the VC either directly took over management or forced a change in management to its preferred candidate(s).
The latter isn’t rare. Most VCs want insider presence but frankly, I wouldn’t even look at an IPO where the original investors totally divest. Smacks of pump and dump.
But wall street is weird.
(shrug)