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Venture Capital remains extremely concentrated leaving tremendous opportunities.

Venture Capital remains extremely concentrated leaving tremendous opportunities.

21:53 24 June in Blog
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Venture Capital remains extremely concentrated on the coasts leaving tremendous opportunities for those willing to mine the midwest. Last quarter, Dropbox completed a single round that was bigger than the the total VC investing in most states. This includes Michigan where a paltry $120m was invested.

That’s right, Dropbox raised in a single round what the entire state of Michigan raise in a full year.

For start-ups – the glass is half empty. Raising funds is harder than ever. For investors – the glass is half full. There are great opportunities in an under severed market.

While Dropbox raised $ 250 million in funding, bringing their total to 257.2 million. This April, Airbnb, the home-sharing site, raised a staggering $500 million. Late-stage rounds have grown enormously over the past few years. The average size of such investments so far this year was $44.1 million, the highest level in the past five years and up 77 percent from last year, according to data from CB Insights.

One thing that has changed in recent years is the sheer amount of capital available for investment in Silicon Valley start-ups. Many big venture capital firms have recently raised big rounds, meaning the traditional backers of tech firms are well positioned to write big checks.

So BIG venture is back in big ways but this should not confuse us about the difficulty that remains for Michigan start-ups who are not raising final venture rounds as they plan their IPOs. The difficulty firms are having raising funds suggests there are gems to find here.

Karen Letain

kletain@bluewaterangels.com
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