 |  |  |  |  |  |  |  |  |  |  |  |
VC money in software: Where has it gone in 2006 ?
Software equity group's report brings out the following key trends in 2006:
SaaS providers significantly outperformed the software industry in general on an enterprise value to revenue basis and enterprise value to EBITDA basis. Despite generally higher infrastructure costs and more deferred revenue than their perpetual license counterparts, the median revenue growth and EBITDA margin for SaaS Index companies was significantly greater than that of the SEG Software Index. It's easy to grow when your base is small. Let us wait and see how the growth plays out once these SaaS pure plays hit some scale.
Of $4.9 billion invested by VCs in the software sector, $175 million, or 4%, went to 61 startup/seed stage entities. While the absolute number is very small, it represents a 146% increase in the funding of start-ups over 2005. Early stage software companies found the going far more difficult, with VC investments declining for the third consecutive year in terms of both dollars invested ($592 million, -35%) and companies funded (169, -32%). Reflecting a continuing VC bias toward established companies with brand identity, customer loyalty and recurring revenue, expansion stage software companies attracted 38% of VC funds invested in software ($1.9 billion).
2006 established new benchmarks for domestic M&A activity across all industry sectors, beating the aggregate M&A purchase price and M&A deal volume records set in 1999 and 2000
I would have loved to get my hands on the full report, but well it costs $295!Venture capital
Linking and Sharing
If you found this page useful, consider linking to it.
Simply copy and paste the code below into your web site (Ctrl+C to copy)
It will look like this: VC money in software: Where has it gone in 2006 ?
Trackback
Tell a friend
