The mysterious world of venture funding statistics

New data suggests that venture funding may not what we think it is. What will it take to get trustworthy numbers?

Over the last few weeks, we've seen a bevy of numbers related to venture funding and the glimmer of hope that dollars are moving back into innovative new companies. Having raised a decent amount of venture capital and spent a lot of time with venture people, I do believe that new investments will help get the economy out of the gutter.

The big question is just how much is being invested and how does the data compare to months/years/decades gone by. Unfortunately, it's nearly impossible to tell due to inconsistencies in how the top two authorities, VentureSource and MoneyTree survey and measure financings.

According to new data from Chubby Brain, the delta between the two is dramatic and unexplained:

How can it be that one source reports $3.7 Billion in funding and 15% growth over Q1 (ThomsonReuters), while the other declares the actual number to be $5.27 Billion representing a 32% growth rate over Q1 (DowJones)? Further exploration of the VC activity figures provided by the two sources over the last six quarters paints an alarmingly schizophrenic picture: the numbers are consistently divergent, and often wildly so, on average by $652 million.

Discrepancies in venture stats
Discrepancies in venture stats Chubby Brain

Odds are that most of the discrepancy can be explained through some detailed analysis of the survey methodology, but what's not explained is how the delta between the results can be so huge. One to two percent might be understandable, but ten percent or more signifies a serious issue with the results.

Follow me on Twitter @daveofdoom.

About the author

Dave Rosenberg has more than 15 years of technology and marketing experience that spans from Bell Labs to startup IPOs to open-source and cloud software companies. He is CEO and founder of Nodeable, co-founder of MuleSoft, and managing director for Hardy Way. He is an adviser to DataStax, IT Database, and Puppet Labs.

 

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