The market value of venture capital-financed companies in the US has soared more than 20 per cent, buoyed by the Facebook funding round, finds the Dow Jones US Venture Capital Index.
The market value of venture capital-financed companies in the US has soared more than 20 per cent, buoyed by the Facebook funding round, finds the Dow Jones US Venture Capital Index.
The index value, which is designed to measure changes in the market value of venture capital-financed companies in the US, was 1,455.12,1 on 30 September last year, up 20.4 per cent compared with three months earlier.
The increase is nearly double the Dow Jones US Total Stock Market Index increase of 11 per cent recorded in the same period, a statement from Dow Jones said.
Susan Woodward, an economist and the founder of Sand Hill Econometrics, comments, ‘Venture index values are usually driven by the value of companies exiting during the quarter.
‘However, this quarter’s total index value is significantly affected by the Facebook round of funding in December 2010. Thus, despite being a fourth-quarter event, Facebook influenced third-quarter values.’
Woodward adds that overall the third quarter was ‘a good one’ for venture capital with an estimated $5.7 billion (£3.5 billion) in new money raised and about $6.5 billion returned to investors, presuming initial public offers hold their value until the lockup expires.
The index tracks the value of companies headquartered in the US that have received equity funding from institutional venture capital funds. Excluded from the index are companies that receive funding solely from “angels”, or leveraged buy-out funds. It is market value weighted and is reviewed quarterly.
