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By Heidi Longaberger
 Venture
capital (VC) resources are used by a variety of businesses and
researchers, but the primary users fall within three categories:
venture capitalists, investors and entrepreneurs.
Venture
capitalists commonly need data to source, or find partner VC firms,
for a particular investment or to find fund performance data.
Comparable company financial data is also commonly sought.
The
institutional investor may need to research the VC firm that is
pitching to them during a fundraising visit.
Entrepreneurs
need to have the latest information on a VC firm to whom they may be
presenting their business idea, or need to find firms that invest in
their particular type of business. Resources targeted towards this
group could fill a few articles!
Venture
a Guess?
Let's
start with an explanation, albeit oversimplified, of the venture
capital process. Venture capital is a type of private equity (PE)
capital used to make investments in a company. The company can be in
various stages of development, from idea stage to later stage. The
capital used to invest in a company forms a VC's fund. The capital
can be raised from institutional investors, such as state retirement
funds or university endowments. On a smaller scale, investments can
come from family trusts and individuals. These investors become
Limited Partners in the fund, or LPs. The firm is known as the
General Partner, or GP. The companies that receive investment become
a part of the fund's portfolio. Companies generally remain in the
portfolio for four to eight years, and by then have either shut down,
are written off for under-performance, or have been acquired or gone
public. Distributions from a sale or a public offering are made in
cash or shares to the LPs and the GPs, hopefully beyond their initial
investment.
The industry has undergone much turmoil during the
past decade, suffering from the economic ramifications of 9/11, as
well as the recent banking and real estate fiascos. Yet there still
remains a great deal of innovation and capital in the market, with
growth opportunities burgeoning internationally. According to Dow
Jones VentureSource, over $14 billion was invested by VCs in the U.S.
over the first three quarters of 2009. Europe saw $1.8 billion in VC
investments during the same time frame. Many companies that are now
household names all got their start with VCs: think Google, Apple,
and Amazon.com.
Resources
and Databases
VC
industry information falls within the inevitable two categories: fee
and free, the former having the most detail and malleable performance
data, and the latter making the boss happiest.
VC
Resources for a Fee
Databases
There
are several subscription databases, which vary in functionality,
scope and data quality. I will detail five that are well used in the
industry. I won't address specific pricing, as this is dependent on
several factors. The annual pricing for this group begins around
$13,000 and ranges up from there.
Dow Jones VentureSource,
www.venturesource.com
This
database focuses solely on VC data, including firms, funds, companies
and LPs. VentureSource prides itself on data quality, contacting each
firm on a quarterly basis. Static fund performance data is provided
by investment advisor Cambridge Associates. Dow Jones also provides
some nice quarterly reports chock full of statistics. International
coverage got a recent boost with the purchase of UK based Library
House, which focuses on European VC.
Thomson Reuter's
ThomsonONE.com Private Equity Module
(FKA:VentureXpert),
http://digbig.com/5bbaad
This
is a robust database of both VC and buyout information. As well as
profile data on firms, funds and companies, the database has long
been the reigning king of reporting fund internal rates of return
(IRR) and performance benchmarking. As of Dec. 2009, what was
formerly known as VentureXpert will be offered exclusively as a
module for purchase in the ThomsonONE Analytics product line. The
data is endorsed by the National Venture Capital Association (NVCA)
and the European Private Equity and Venture Capital Association
(EVCA)
Preqin, www.preqin.com
UK
based Preqin brings a more global perspective to PE data, with a
broad geographic focus. The seven year old company also trumpets its
data quality measures. This includes having a multi-lingual analyst
base that monitors regulatory filings, contacts firms and utilises
the U.S. Freedom of Information Act. Preqin's PE package can be
broken down into 4 modules. Its Performance Analyst module is a
competitor to VentureXpert's performance database. Preqin also
provides a number of items for free, including a benchmark report,
research reports, and a newsletter.
Standard & Poor's
Capital IQ, www.capitaliq.com
Capital
IQ is a multi-faceted database and workflow management tool designed
for the global investment and financial services industries. It
offers data on thousands of companies, industries and transactions
with the ability to drill down and create custom data, notes and
reporting underneath that data. The database can be used in a number
of ways, from deal tracking and relationship management to
customisable search screening, targeting and report creation.
Fig. 1: Capital IQ
PitchBook,
www.pitchbook.com
The
pitch is that their database is a direct competitor to Capital IQ,
based on its capabilities and extensive content. Founded by former
Dow Jones employees, the three year old database's focus has
shifted somewhat from other private equity, such as buyout data, to
building up the VC portion of the database. Pitchbook excludes firms
doing business solely outside the US. The database covers LPs,
service providers, (lawyers, banks, accountants), investors/funds and
companies/deals. A free newsletter is available. They are also
rolling out a performance module that will include returns data.
Some
other databases to check out:
Private Equity Data Center,
http://pedatacenter.com/pedc/,
Portfolio Company Analysis Tool, $195, Valuation and Deal Term
Database
VentureDeal, http://www.venturedeal.com/,
$25 per 100 downloads
Growthink,
http://www.growthinkresearch.com/,
$99/month/user
Capital Hunter, http://www.capitalhunter.com/,
investor and funding directory,
$59/quarter, custom research
services
Directories
Historically,
there have been two directories synonymous with old school venture
capital. They are now owned by the two main PE data providers:
Galantes,
www.fis.dowjones.com/products/galante.html
Now
an online searchable database of 2900 active firms covering both the
US and international, $995, from Dow Jones.
Pratt's Guide to
Private Equity and Venture Capital
Sources,
www.investmentbenchmarks.com/pratts_guide.html
Traditionally
the directory to go to for a comprehensive listing of every VC firm
in the world. The hardcopy directory covers 4,000 active PE and VC
firms, $750, and the online version contains 12,000 firms, $995, from
Thomson Reuters.
News
Dow
Jones VentureWire, a searchable daily online newsletter with
editorial insight, $1095,
http://www.fis.dowjones.com/products/venturewire.html
Dow
Jones Private Equity Analyst, monthly print and weekly email news
going more in-depth than VentureWire,
$1595,
http://www.fis.dowjones.com/products/privateequityanalyst.html
Private
Equity Online, international coverage of the PE industry, online,
$510,
http://www.privateequityonline.com/
Venture
Capital Journal/European Venture Capital Journal, both Reuter's
publications, provide a monthly high-end glossy print and regularly
updated online version, $1680 (VCJ),
www.vcjnews.com
/ www.evcj.com
VC
Resources for Free
Now
to the good part, the free stuff! Resources abound and I will detail
a few that provide some interesting coverage.
Databases
and Statistics
PricewaterhouseCoopers
Money Tree Report, www.pwcmoneytree.com,
using Thomson Reuter's data, tracks quarterly investment activity,
US only. Also an Israeli investment version.
National
Venture Capital Association, www.nvca.org,
is a robust site offering PWC's Money Tree statistics and studies
to non-members. They partner with
European Venture Capital
Association, www.evca.org,
also provides a wealth of statistics and surveys free of
charge
British Venture Capital Association, www.bvca.co.uk,
provides investment, economic and performance research, case studies
and industry guides
Pitchbook and Preqin both offer some nice
reports. Sign up through their websites. Pitchbook's PE
Breakdown Q3 2009 :
http://digbig.com/5bbaae
Directories/Networks
Crowdsourced
networks/directories/databases are popping up, seeking to
‘democratize' information on VC, especially targeted towards
start-ups. Caution may be taken around data integrity, but on the
whole, these directories provide a valuable service to those on a
bootstrapped budget, and are becoming competitive with the large
service providers:
ChubbyBrain,
http://www.chubbybrain.com/,
their Karma Model means that the more data you contribute, the
greater the access to database capabilities. They have also partnered
with Fast Company to provide research
reports
on investment activity.
CrunchBase, www.crunchbase.com,
created by popular web technology blog site TechCrunch
TheFunded,
www.thefunded.com,
not a directory per se, but a site where entrepreneurs can rate their
experiences with VC firms. Like a cross between a VC reality show and
consumer reports.
Fig.2: ChubbyBrain
News
News
sites on venture activity abound, but these two provide a little
something extra:
AltAssets provides a broad range of coverage
by geographic region, as well as industry focus and an LP database,
www.altassets.com
peHUB
is an interactive forum for the venture and buyout industries,
featuring opinionated contributors that write about issues and news
in a blog type format,
www.peHUB.com
The
are many resources available to the VC industry. When evaluating
them, it's most important to check up on accuracy. Discrepancies in
the data and between providers exist, and research techniques vary,
from outsourcing data collection offshore to relying on surveys
filled in by the VCs themselves. The data is only as accurate as the
people who collect and input the information! The recent influx of
collaborative networks providing free research may have a productive
impact on the data environment. The resources will continue to evolve
as user demand and searchers become more sophisticated, and that you
can venture a bet on.
By Heidi Longaberger
Heidi Longaberger, M.L.S Kent State University, has over 15 years of business research experience, having worked in corporate information centers in the broadband, telecommunications, cable, media and venture capital industries. Heidi provides research and analysis on a vast range of technologies, competitors, markets and strategic planning initiatives. Her own independent research business, Longaberger InformationWorks, will be making its debut in Q1 2010. Heidi can be reached at Heidi@Longabergerinfo.com;
LinkedIn; and Twitter.
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