Venture capital dry powder – the capital available for investment – has been fairly steady for the past three years. According to research from alternative investment research firm Preqin, venture funds have $155 bn on the sidelines as of this month, up from $152 bn in December 2010 and roughly the same as the December 2009 level of $154 bn.
The bulk of VC dry powder, according to Preqin, is focused on North America. With $77 bn on the sidelines as of April 2011, this region has close to half the world’s available VC capital. Yet it’s down from the region’s December 2007 (and pre-financial crisis) peak of $89 bn. VC funds focused on Europe have $28 bn in dry powder, with funds focused on Asia and the rest of the world sitting on $51 bn (a record high).
So why is this important to the investor relations community?
Well, VC-backed companies tend to outperform the rest of the market when it comes to initial public offerings. VCs have dry powder and, eventually, they’ll feel the pressure to deploy it. If it’s put into the market effectively, there will be new entries into the IR space (as a result of the IPOs) and they’ll likely have interesting stories to tell investors and analysts as a result of the discipline that can come with VC backing.
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