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PE & VC News

It’s presidential election season.  What better time than now to ask which president since 1985 has seen the strongest venture capital performance during his administration? (Note: the choice of 1985 is based purely on availability of reliable data.  If further historical were readily available, it would have been included in this article.)

Within this period are Ronald Reagan, George W. Bush, Bill Clinton, George H. W. Bush, and Barack Obama.  Who wins? Care to take a guess?

Here’s a look.

Venture Capital by President without Labels

The following graphic is a look at venture capital dollar deals by presidency.  Before labeling the lines, take a guess which president is on top?

As a note of explanation: Each line represents a presidential administration.  The horizontal axis (x-axis) is the number of months into the given president’s administration.  The vertical axis (y-axis) is the percentage growth or decline in venture capital deals since the start of the respective president’s administration.

Interestingly, there are some massive differences.  The winner succeeds by a lot over second place.  Third place is far behind second place.  The remaining two barely register.

Total Venture Capital by U.S. President (No Labels) Source: National Venture Capital Association

Venture Capital by President

Unsurprisingly, Clinton comes out on top by a large margin.  During Clinton’s administration, venture capital deals expanded by an amazing 2,771 percent. Far, far, far behind in second place is Obama at 189 percent.

The remaining members include Reagan at +23 percent (that’s only for part of his administration), George W. Bush (+8 percent), and George H.W. Bush (-26 percent). George H.W. Bush was given the unlucky plot of coming into office at the end of the tech boom and subsequent bust.  It took years for the Clinton bubble to get washed out.

Total Venture Capital by U.S. President Source: National Venture Capital Association

Venture Capital Broken Down by Type of Venture Capital

The total deal volume is one way of viewing the data.  Another way is to break down the details.

Here’s the detail look.  The four colors are four stages of venture capital funding.  The first measure is Seed stage, Early stage, Expansion stage, and Later stage.

The massive expansion in Expansion stage funding is readily transparent during the Clinton administration.

Venture Capital Deals by Funding Stage Source: National Venture Capital Association

Conclusion

Perhaps completely unsurprising to industry observers, the strongest performance of venture capital occurred during the Clinton administration. Clinton had the fortunate (perhaps unfortunate) opportunity to be in the White House during the technology bubble.

The remaining members come in well behind with the other presidential administrations having comparable paltry growth.

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If there’s anything the venture capital and private equity world is for sure, it’s that at the sectors are competitive, uber competitive. Can you guess which entities come out as the most active?  Here’s a look.

Accelerators

First, a look at the top accelerators.  The first graph is a look at the top 10 accelerators since 2003 by number of investments in companies made.

Can you guess which entity is the top one? Perhaps an accelerator located in Silicon Valley?  Or Boston’s biotechnology hub?

Top 10 Accelerators Since 2003 (No Labels)

Here’s the answer.  Perhaps unsurprisingly, the top accelerator since 2003 is 500 Startups at 532 investments in 442 companies.

In second place is Y Combinator at 448 investments in 400 companies.

The top two are likely completely unsurprising given that these two are among the most prominent accelerators in Silicon Valley.

The third place is probably surprising.  It’s not located in what are traditionally considered angel investor hubs.  In third place is DreamIt Venture Philadelphia at 70.

The remaining members of the top 10 include StartX at 56, AngelPad at 54, DreamIt Ventures Austin at 53, Techstars Boston at 47, Entrepreneurs Roundtable Accelerator at 43, Gener8tor at 39, and Techstars Seattle at 38.

Top 10 Accelerators Since 2003

Venture Investors

Shifting to the investors side, here’s a look at the top 10 venture investors since 2003.

Can you guess which entities are on the top of this list?  Could a non-Silicon Valley entity take a top spot?  What about a surprise entity out of less well-known angel hubs like Salt Lake City, Utah or Austin, Texas?

Interestingly, although the list is still skewed, it is not nearly as skewed as the accelerator list, confirming that venture capital entities are more well-rounded than exclusive accelerators.

Top 10 Venture Investors Since 2003 (No Labels)

Here’s a look at the top 10.

Fascinatingly, the top spot goes to New Enterprise Associates, with 917 investments in 506 companies.  On second thought, the fact of finding New Enterprise Associates on the top of the list isn’t all that surprising given the length of time the company has been in business (since 1977) and the geographic depth of its coverage (headquarters include locations in Silicon Valley, New York, Washington, D.C., China, India, and others).

In second place is the relatively prestigious Kleiner Perkins Caufield & Byers at 698.

Third place may be somewhat surprising. It’s Intel Capital at 568.  Corporate venture capital is an important component of the business creation world, and finding Intel in the top 3 is somewhat encouraging.

Other member of the top 10 include Accel Partners, DFJ, Sequoia Capital, 500 Startups, First Round Capital, Polaris Partners, Y Combinator, U.S. Venture Partners, Bessemer Venture Partners, Canaan Partners, Andreessen Horowitz, and Venrock.

Top 10 Venture Investors Since 2003

Conclusion

The venture world is competitive and crowded. The top 3 accelerators since 2003 include 500 Startups, Y Combinator, and DreamIt Ventures Philadelphia.

On the investor side, the top 3 investors since 2003 include New Enterprise Associates, Kleiner Perkins Caufield & Byers, and Intel Capital.

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Last year was a relatively rough year for IPOs.  According to Renaissance Capital, IPOs in 2015 were down over 30% from their 2014 level.

The start of 2016 doesn’t appear to be offering any sort of relief anytime soon.  The IPO market is in a deep freeze.

IPOs, U.S.

The question here is – what does the IPO slow down through at least the first half of 2016 mean for Wall Street bonus pay?

Here is a look.

Bonus Pay

First, here’s a look at the history of Wall Street bonus pay by year.

The hottest bonus year occurred in 2006 at about $34 billion, representing an average bonus of about $191,000.

Following 2006′s high mark, bonus pay has experienced some massive volatility, with the bottom occurring in 2008 at a low of $101,000.

Bonus pay has recently been on a downward trend after reaching a recent peak in 2013.  Should 2016 see another drop in bonus pay, and it appears that’s likely to be the case, 2016 would make for the third consecutive year of dropping bonus pay.

Wall Street Bonuses ($billions)

Average Wall Street Bonus

The Connection

The previous section was simply speculation on what might happen to bonus pay in 2016.  Here’s an empirical look (although this here is also really just speculation on what financial executives will do with their cash later in the year).

Average Wall Street Bonuses and IPOs in the U.S.

Does it look like there’s a connection?  To the in-the-know, of course there’s a connection.  By definition, in a direct manner, the IPO business is part of a certain financial firms’ bottom lines.

How strong is the connection?

A Scatterplot View

Here’s a scatterplot view and the linear regression correlation of IPOs with average Wall Street bonuses.  Interestingly, the connection isn’t that strong.  The correlation coefficient (measure of association) is $129.  The $129 means that for every new IPO, the average Wall Street bonus rises by $129.  The constant is $112,484.

Perhaps even more interesting that the simple linear correlation is which years saw average bonus pay come in higher than the IPO figures would predict.

Perhaps unsurprisingly, 2015 was an “outperform” year for average bonus pay.  Average bonus pay came in at about $146,000.  Given the weak IPO market in 2015, the model presented below would have predicted only $130,000.

Either way, it was good to be a financial professional working on Wall Street in 2015.

The Correlation Between Wall Street Bonuses and IPOs

Conclusion

Overall, 2016 appears to be set for a very weak year for IPOs.  The weak IPO picture affects lots of industries and individuals.  Among the entities affected are financial professionals counting on bonus pay.  This year has the potential to see another weak year for Wall Street bonus pay, possibly dropping for the third consecutive year after peaking in 2013 at about $28 billion.

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CEO Pay: Does the Financial Industry Win?

March 21, 2016

There is perhaps no more contentious issue that compensation.  The contentiousness becomes even more heated when discussing CEO pay. Question – which industry has the highest paid CEOs? Here’s a look at average CEO pay and CEO pay growth by industry according to recently released figures by Pitchbook. Before looking, which industry would you guess wins?  Finance?  […]

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How Did Venture Capital Perform in 2015?

February 8, 2016

The 2015 year is now a month behind us.  How did venture capital do in 2015?  Here’s a look. Total Capital Invested The first look is venture capital invested and number of rounds closed by year. Interestingly, on a total volume basis, 2015 was a banner year for total capital invested.  Total capital invested reached […]

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Looks Like Base Salary Is Taking a Larger Bite of the Compensation Pie

January 25, 2016

Two interesting movements occurred in the most recent Bureau of Labor Statistics’ release of employee compensation in the finance and insurance industries. First is the percentage of total compensation devoted towards wages and salaries and second, average compensation per hour. Which direction would you guess the two are heading?  Are wages and salaries eating up a […]

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The Politics of Disposable Income

December 28, 2015

This past week saw one of the most well-known economic indicators – Disposable Personal Income – come in about in line with expectations. With the year almost over, and another presidency about to hit the road, now seems like a good time to take a look at how Disposable Income has performed by presidency. Before taking […]

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Playing Politics with the Federal Funds Rate

December 14, 2015

If things go as expected, on Wednesday Federal Reserve Chairwoman Janet Yellen will announce the first Fed rate hike in almost a decade (2006 was the last time the Fed increased the federal funds target rate). Since 2006, we’ve seen a peak in the housing market, a collapse in global financial assets, unemployment above 8%, […]

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What Is Going on with the American Consumer?

December 1, 2015

Every private equity professional – whether they want to admit it or not – is somewhat of an economist.  Private equity professionals must, by their very nature, follow demographic shifts, economic outlooks, and other economic forces. The force discussed here is the American consumer, typically considered the driving force of the American economy.  This presumption […]

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Could 2015 Mergers and Acquisitions Reach an All Time High?

November 16, 2015

Pitchbook recently released their accounting of mergers and acquisitions performance. Unless the fourth quarter of 2015 falls off the planet, 2015 is set to reach an all-time high in value terms.  Overall, if deal value climbs only by the amount it did in the first quarter of 2014, deal value in 2015 will reach about […]

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