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Time Between Initial Venture Capital Investment and Exit

by Jonathan Parker

  • 19 Jul 2012
  • PE

The length of time between the initial venture capital investment in a company and the date at which the investors exit can vary greatly depending on the industry, region and other characteristics of the company. On average, companies exited in 2010 had received their first VC funding 4.65 years earlier. This rose slightly to 4.67 years for companies exited in 2011, and increased again to 4.73 years for companies exited in 2012 so far.

When analyzing companies by industry, those exited in 2012 and operating in the semiconductors and electronics industry on average received their first investments 6.66 years before the exit date. On the other hand, internet companies exited in 2012 raised their first funding an average of 4 years before the exit date.

An example of a long-held company is Exa Corporation, a software developer based in Massachusetts, US, which received a Series A financing in April 1993 from Fidelity Ventures and private investors, and raised further funding from a range of other investors. The company held its IPO on Nasdaq in June 2012, raising $62.5mn. This valued the company at around $132mn, and gave investors an opportunity to exit their stakes in Exa more than 19 years after their first investment. In stark contrast, Socialcam, which has developed a video application for smartphones, announced a round of angel funding in April 2012, and was acquired this week by Autodesk for $60mn.

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