Brad Feld

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Venture Deals Thrive in Colorado – Really?

Jul 25, 2005

About 20 days after the end of each quarter, Ernst & Young/VentureOne releases a survey on venture capital funding.  At about the same time, PWC releases their similar survey (MoneyTree).  A rash of articles are written over the weekend and usually hit first thing Monday in the business section of newspapers around the country (and – shockingly – in blogs) covering funding nationally, by city, and by market segment.

On Friday, I got a call from Ross Wehner, a Denver Post staff writer who I like.  He was calling to get my thoughts on the “numbers for the quarter.”  After ascertaining which numbers Ross was talking about (it was a beautiful Friday afternoon in Homer, Alaska – I was not thinking about the E&Y / VentureOne survey), the conversation went something like:

Brad: “Ross – who gives a fuck?”
Ross: “C’mon Brad, you know I can’t print that.  What do you think?”
Brad: “The numbers are irrelevant – plus they are probably wrong and misleading.”
Ross: “Well – there were 24 deals in the first half of the year up from 19 in 2004 and the amount invested was $291m up from $192m.”
Brad: “Yeah, but wasn’t Webroot in there?”
Ross: “Yeah …”
Brad: “So – take it out because – while it’s a venture deal, it’s an anomaly and skews the numbers – so 23 deals and $183m.  That seems like a statistically unimpressive difference.”

We had a good chuckle (Ross is smart – he gets it) but he still had an article to write.  Seriously, does anyone really care about this stuff?  Why are E&Y and PWC spending time on this crap instead of doing good audits and getting S-3’s effective for public companies?