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Profit Dynamics Venture Capital Survey
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Venture Capital Survey
How long does it take for Venture Capitalists to close?
When asked how quickly their venture capital company had ever invested in a company, from the time they received the business plan until the deal closed, more than 4 out of 5 reported they were able to close a deal in less than 60 days, with 41% saying they had closed a deal in under 30 days. The average for all respondents was roughly 40 days.
How Long Should An Entrepreneur Expect The Funding Process To Take?
The more important factor however, is not how quickly has the venture capitalist ever closed but what is the average time it took to close a deal.
Under 30 days: 1% of respondents
The average for all respondents was just over 80 days, double the quickest time period--or nearly three months. Another way of viewing this information is only 19% of venture capital companies can typically close a deal in less than two months. It is almost an axiom that entrepreneurs seeking capital do not allow enough time for the funding process in their planning.
Several VCs stated there was no difference between the quickest they had ever closed and their average length of time required for closing.
Because the volume of new companies contacting VCs has increased so much, it is reasonable this might affect how quickly deals are getting done. Among those that said the number of companies had "greatly increased" or a 5 on the scale, two-thirds said the average time to closing was under 90 days, not significantly different from the average for all those surveyed. Those who said the number of companies contacting them had stayed the same or declined, reported average times to closing almost identical to those who said the volume of plans had greatly increased.
So it doesn't look like the greater volume of companies to review
has resulted in more time being required to close a given investment.
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