Monday, August 31, 2009

Fewer Limits on VCs, Now is the Time for Expansion

This op-ed in the New York Times contends that now is not the time to put pressures on venture capital and limited partners in a constrained economic environment.

The article touches off a little brainteaser for me that I have puzzled over in preparing the investor panels for the Education Industry Investment forum in Phoenix, Arizona in March.

It would be a shame to impose any new limits now, when venture capital is the asset class that can best help build and nurture the companies that bring about growth and job creation. The figures are compelling. In 2008, venture-backed companies that went public in previous years accounted for 12.1 million jobs and $2.9 trillion in revenues for the United States Treasury.


It's not hard to define how healthy the education market is right now. While investors are troubled by bank conditions, deals are still being done and growth prospects are high. Investors are even talking about how crowded the market is beginning to look and they are looking for windfalls and opportunity gaps outside of the traditional investing hot spots.

All signs point towards the idea that there is more of an opportunity right now for venture capital and private pools of capital to invest in education.

Howard Levy at Kaplan promotes the idea of global investment opportunities in for-profit education. (pdf)

This is certainly true for Indian companies and Indian investors in one of the two largest markets in the world for education investment.

The other giant market for education, by pure population numbers, is China.

Chinacast, based in Beijing, is a is a leading for-profit, post-secondary
education and e-learning services provider in China
. They look poised to take advantage of a worldwide need for distance learning and vocational training services.


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