August has developed a notorious reputation as the month ‘where all VCs go on vacation’. We wanted to test this commonly held view with some hard data to see if VC really slows down in August or if this is just an excuse to avoid taking meetings with certain startups.
got 20+ emails today from entrepreneurs complaining VCs are out until labor day. WTF? as a VC, now’s the best time to hustle! @eniacvc
— nihal mehta (@nihalmehta) July 31, 2014
And the data doesn’t show that August is a dramatically slower month for VC financing activity overall. Interestingly, however, when we peel back deal activity by geography, we see Europe sees a much larger slowdown than US markets. (insert joke here)
[Tweet “If you’re trying raise venture capital in August, don’t even think about talking to a European VC.”]
VCs aren’t taking August off (at least regularly)
The chart below shows the monthly U.S. tech trend of deals that included the participation of a venture capital or corporate venture capital investor since January 2012. Of note:
- In 2012, August was the 6th most active for tech VC deals
- In 2013, August was the 5th most active for tech VC deals
- In 2014 YTD, it has actually been the slowest month of the year.
As the data highlights, August is not consistently a slow month for tech deals.
But what about in Europe?
Interestingly, Europe sees a significant slowdown versus the three largest U.S. hubs for tech VC investment deals in August. When we compare the average # of monthly deals over the period vs August, we see the European slowdown is very real.
|Europe||-44% to -23%|
|California||-11% to +5%|
|New York||-20% to +17%|
|Massachusetts||-12% to +6%|
As the above illustrates, the biggest US venture hubs see varying declines (and gains) in August as a proportion of overall monthly tech deals whereas Europe consistently sees a dealmaking drop.
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