Will the Facebook IPO result in huge influx of venture capital investment?
Yesterday we witnessed what Michael A. Greeley, Chairman of the New England Venture Capital Association and a General Partner at Flybridge Capital Partners, describes as “the most spectacular IPO of a venture-backed company in the history of mankind.” A lot of people just became fabulously wealthy (or wealthier), and one of the questions that many will be following with interest over the coming years is what is going to become of all this liquidity.
Greeley speculates that, as distributions start rolling in, the VCs and underlying LPs who were fortunate enough to have invested in Facebook may see it fit to recycle the proceeds, injecting a much-needed dose of capital back into the industry. “Additionally, we are watching a very deep and wealthy pool of new angel investors get created, and collectively they will play a powerful role in the next wave of great company formation,” writes Greeley. “Much like the ‘PayPal Mafia’ from the last decade which sponsored many of this cycle’s great companies, the Facebook Mafia…could become significant LP’s in many venture funds which, if that were to be the case, would further drive VC industry expansion.” For more on the impact of the Facebook IPO on the venture capital industry, read Greeley’s full post here.
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Want to learn more about IPOs? Read this OpenView post to learn why it’s not actually an exit strategy and how your company should really prepare for it. And for an example of how not to handle an IPO read this post on Groupon from the OpenView Blog.