Around the Net
More Evidence Of VC Decline?
- The Wall Street Journal, Thursday, October 13, 2011 12 AM
Based on interviews with investors and entrepreneurs, The Wall Street Journal suggests that venture capital is drying up for tech start-ups. The timing of the story is curious, as it comes on the heels of a report from Thomson Reuters and the National Venture Capital Association, which found that 52 venture capital firms raised $1.72 billion during the third quarter, representing a 53% decrease in dollar commitments. That represented the lowest level in eight years, GeekWire.com noted earlier this week.
“The quarter’s low fundraising numbers are reflective of ongoing challenges within the venture capital exit markets,” Mark Heesen, president of the NVCA, stated. “Economic instability continues to impact the ability of venture-backed companies to go public which, in turn, has prevented many venture firms from delivering solid returns to their investors.”
According to the WSJ, the decline in VC funding is some entrepreneurs to look for "bridge" financing to keep forging ahead, or to cut the valuations they are seeking. Indeed, the average valuations of “young companies” have dropped recently to $3 million to $5 million, from $6 million to $8 million earlier this year, Naval Ravikant, a Silicon Valley entrepreneur and investor.
