Monday, July 7, 2008

VC Crisis Could Slow Innovation

The Dow Jones’ Scott Austin provides an interesting perspective on the recent press release from the National Venture Capital Association (NVCA) that calls the inaccessibility of the public markets a crisis for the VC industry.

Venture Capital Industry Under the Gun

Austin also cites a study from VentureSource that reports more than 1,400 companies funded during the dot com boom of the late 1990s still exist in venture firm's portfolios.

“A majority of these companies -- which received a total of about $50 billion in venture capital and employ more than 150,000 thousand people -- will have to shut down or sell on the cheap. Venture capitalists can't hold onto them forever.”

While I have seen too many instances in which venture capitalists have made decisions to the detriment of a company’s management, employees and customers, I recognize a healthy and thriving technology community is dependent upon their contributions.

And it’s more than the money they manage. VCs are prudent risk-takers and provide the funding, counsel and insight that makes innovation possible.

The VC industry needs to get well….quickly.

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