While some might see the drop in the amount of money invested in venture capital as a sign of bad times, Venky Ganesan, managing director of Menlo Ventures, a Menlo Park, Calif.-based investment firm, said that it ironically makes it a great time to invest.
"The smart money is realizing this," Ganesan said. "The popular money rushes in at the wrong time and leaves at the wrong time. You want to zig where others are zagging."
Because of the way investors think, the numbers don't always indicate the best seasons to invest, according to Ganesan.
"The supply of capital into this asset class is declining just as it is turning out to be one of the best times to be in venture capital," Ganesan said. "This isn't surprising because instead of buying low and selling high, investors tend to sell low and buy high."
Ganesan holds high hopes for the next decade of investing due to the market of instant gratification, he said.
"We think the next 10 years are going to be the best time to invest in venture capital because the 'right-now economy' is going to result in great returns to everybody," Ganesan said.
Heesan of the NVCA said in the report that despite the dollar drop in capital investments, another trend is also at work that could potentially raise the amount of future funds.
"Counterbalancing this trend is the recent uptick in the venture-backed IPO market," said Heesan, "which, if sustainable, may very well draw more dollars into the asset class in the coming year."
Adly's Delph said a proven track record or unique value proposition will always draw the most attention.
"A strong product, technology team and a strong operations team with a proven track record in execution is really the best recipe for success in terms of capital raising," Delph said.
PUBLISHED JULY 11, 2013