Editor's note: To view our most current VC 100 listing, click here.
After three years of relative drought, the "MoneyTree" is growing again. A total of 608 startup and early stage companies got their first round of venture capital in 2004, according to a special analysis of the "MoneyTree Survey" prepared for BIZ Experiences by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association. Together, those early stage companies received $2.68 billion in funding. Both figures are up notably from 2003--the first increases in three years. On average, startup companies received $2.1 million each, while early stage companies averaged $5 million each.
More encouraging is that the factors underlying this growth are organic. Since investing peaked in 2000, VC firms have naturally spent a large portion of their time working with companies in which they had already invested. Now, as many of those companies have matured, VCs can turn more attention toward the next crop of seedlings. The VCs on this year's list are doing just that: The median number of first-time investments in startup and early stage companies is four, compared to a median of three last year. This year, VCs had to complete at least three qualifying deals just to make it onto the list. Last year, two was enough.
Still, cultivating venture capital is no easy task. BIZ Experiencess must combine an idea's potential with equal measures of prudence and perseverance. --Tracy Lefteroff, global managing partner, venture capital practice, PricewaterhouseCoopers
About Our Extended Listing
Your company doesn't have to be in the formative stage to secure venture capital. In 2004, a total of 188 companies that were further along in their development cycle got their first round of venture capital--and these companies received more money on average. The 156 expansion-stage companies got an average $8.4 million each; the 32 later-stage companies did even better, with $13.5 million on average. The 2004 listing of the most active VC firms investing appears on our main Venture Capital 100page.
Crunching the Numbers
Wondering how we came up with this list of the top venture capital firms for BIZ Experiencess? Rankings are based on the number of first-time fundings to companies in the startup and early stages of development made by VC firms and similar entities in calendar year 2004, as measured by the "MoneyTree Survey" from PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association (at www.pwcmoneytree.com).
Companies in the startup stage of development may have been in business for only a few months. Companies in the early stage of development have generally been in operation less than 24 months. These fundings represent the first time a company receives financing from a professional VC firm in exchange for equity. More mature companies--those in the expansion or late stages of development--are not included in the analysis even though they may have gotten venture capital for the first time in 2004.
