The Consolidation Bug

The survey revealed an overwhelmingly positive response of the VCs in favour of mergers & acquisitions (M&A) among their existing venture investments.

94% of the VC funds are either actively looking towards such M&A or are interested in M&A, though they may not be proactive about it. Consolidation is the order of the day and as one VC put it - "many young VC's invested heavily last year and have lost a lot of money; the industry has gone thru a steep learning curve...".  This has made the VCs wait and watch for a better exit timing and use the breather to consolidate.

Consolidation of existing venture investments would provide a means of balancing out of portfolios, concentrating on core strengths, getting greater leverage in terms of investible funds, and generally improving the management of investments by having fewer but higher value investees.

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