Venture Backed Companies in Fortune 500
The goal of Venture Capital is to stimulate growing businesses by providing capital with the expectation of appreciation. Venture capitalists will invest in whichever businesses they see fit. While the precise definition of "fit" companies varies by venture capitalist, there are industry-wide trends. Take, for instance, the dot com boom. In that time period, Venture Capital reached an all time high of $27M in 1999 [1]. Like in any other market, there are trends in VC investment. Moreover, these trends tend to reflect greater movements within the economy (as we saw with the boom in '99-'01, the decline in the recession).
Like in venture capital, Fortune 500 trends develop by sector, location, and overarching market conditions. Obviously, with the development of technology and advent of internet, tech companies arose in the list. Earlier on, the same was true for the automotive industry
Our goal is to isolate trends in Venture Capital since 1980, and compare those trends to changes in the Fortune 500 over time. Ideally, our report will segment the changes in VC and the F500 into different categories (sector, US location, time period). Additionally, we are keenly interested in finding which (and what kind) of venture-backed businesses have entered the F500 since '80. Doing this analysis will shed some additional light on the primary focus of this project: isolating and comparing trends in Venture Capital and the Fortune 500.
Methodology
To find exactly which companies were worth examining, we drew names of all venture-backed companies from SDC Platinum's MoneyTree deal list, and then used a perl script to match said list with each Fortune 500 between 1980 and 2014 (the most recently released year). We drew our Fortune 500 from 1980-2005 from Fortune magazine. We then drew 2005-2014 data from TopForeignStocks' database [2].
Once the names were matched, we pulled specific data on these companies of interest from SDC platinum. These data included information on the first/last date of VC investment, total capitalization of the VC investment, specific location, and industry class/subclass. To ensure that our industry-specific data were accurate, we downloaded NAICS codes from the WRDS database and spotted no points of conflict between SDC and WRDS' conclusions.
Once all of these data were in place, we dumped everything into Excel and attempted to draw meaningful conclusions. While we didn't find any especially surprising relationships within the data, we were surprised to note several trends in F500 and VC.
Greater trends in the Fortune 500 and Venture Capital
The goal of Venture Capital is to stimulate growing businesses by providing capital with the expectation of appreciation. Venture capitalists will invest in whichever businesses they see fit. While the precise definition of "fit" companies varies by venture capitalist, there are industry-wide trends. Take, for instance, the dot com boom. In that time period, Venture Capital reached an all time high of $27M in 1999 [3]. Like in any other market, there are trends in VC investment. Moreover, these trends tend to reflect greater movements within the economy (as we saw with the boom in '99-'01, the decline in the recession).
Like in venture capital, Fortune 500 trends develop by sector, location, and overarching market conditions. Obviously, with the development of technology and advent of internet, tech companies arose in the list. Earlier on, the same was true for the automotive industry
Our goal is to isolate trends in Venture Capital since 1980, and compare those trends to changes in the Fortune 500 over time. Ideally, our report will segment the changes in VC and the F500 into different categories (sector, US location, time period). Additionally, we are keenly interested in finding which (and what kind) of venture-backed businesses have entered the F500 since '80. Doing this analysis will shed some additional light on the primary focus of this project: isolating and comparing trends in Venture Capital and the Fortune 500.
Information Technology
Keeping with trends in the greater VC community [4], tech-based companies lead the charge in our sample of the Fortune 500.
- On average, these Information Technology companies entered in 1989. Semiconductor and computer-related companies entered first, at an average of 1986 and 1989 respectively. Communications and media entered on average in 1999 (in the midst of the dotcom boom)
- While the average departure is about 2003, this distribution of exits is effectively trimodal. Computer-related firms were the first to go, at 2000 on average.
- Semiconductor companies generally exited the F500 in/around 2005
- Communications and Media companies have largely stayed in the F500, but some left in the early 2010's.
