demolishing Thanksgiving leftovers

Although this step removed a relatively small percentage of deals from our startup fundraising analysis, the noise-reduction effect for VC fund fundraising is more significant. Because VC firms tend to be relatively quiet about the launch of new funds, and regulatory filing requirements on new funds are relatively light, data covering the months and days on which funds were started is hard to come by. Often, only the year is known, and, in that case, Crunchbase defaults the listed start date to January 1 of the known year. (It’s also entirely possible that a large number of funds declare January 1 as their start date on regulatory filings, even if they closed out their fundraising activity on a different day .) Regardless, this step removed some 371 funds putatively started on January 1st and a few hundred others declared to start on the first of other months throughout the year. This did not impact the quarterly percentage distribution of VC fund fundraising in a statistically significant way. Why is some fundraising seasonal (or not)? In general, VCs don’t appear to be any less likely to strike deals in the “dog days” of summer than any other time of the year, thus debunking the conventional wisdom of the “summer slowdown.” Sure, there’s a bit of a dip in July, on average, but that dip is neither sustained through subsequent months nor steeper than other month-to-month deviations from the norm. If anything, our findings point to November as a particularly bad time for startups to raise from VCs because, like most others in the U.S., investors are occupied with more important things like seeing family and demolishing Thanksgiving leftovers. But, again, these deviations from the mean (around 8.33 percent per month) aren’t that significant, meaning that the pace of dealmaking stays relatively stable throughout the year. This is likely because there is high competition for a relatively small number of good deals, and that competition promotes a kind of year-round vigilance that tempers any tendency toward seasonality in the industry Business Center. What explains the comparatively more seasonal quality of VC fund fundraising is somewhat less clear. For many limited partners, venture capital is just another asset class, one that is, on average, a relatively small part of their broader portfolios. Given that governments (largely by way of pension funds) and institutions (university endowments, for example) make up a significant portion of the population of limited partners, it’s possible that these groups are subject to investment timelines and other mandates which tilt their investing activity to earlier in the year. But that’s just speculation at this point. It’s certainly a pattern that merits further investigation. Again though, these findings show that U.S.-based founders of startups and venture firms alike shouldn’t shy away from fundraising, no matter the time of year. In most aspects of business, timing is crucial, and it’s also crucial when it comes to raising money. But startup founders, and to an extent venture capitalists, as well, shouldn’t time their raises by some arbitrary spot on the calendar or superstitions. Other factors matter far more than the date. Charting Methodology Charts are based on Crunchbase data for more than 43,600 venture capital deals struck between 2011 and 2016, with companies based in the United States. It is sector, stage and geographically agnostic. Due to a quirk in how Crunchbase assigns dates to deals, we removed all deals that occurred on the first of the month, which clears the deals for which the year, month and day aren’t known. Even though this removes a bit of statistical noise from the rounds data, we’ll explain in the next section why this data cleaning step becomes quite important . * We’re using the “Announced On” dates listed in Crunchbase data, which occasionally lags due to normal market realities involving closing and announcement timelines.