Steven R. Gerbsman, principal with Gerbsman Partners, commented that "venture capital and private equity should start seeing additional challenges in their portfolio companies." While he believes that VCs still have lots of cash to put to work, he expects that decisions to consolidate portfolio firms and their platforms may be more likely to occur now. Another investment banking expert who asked to remain anonymous believes that the drying up of public financing may lead to lower capital expenditures by new ventures, which would negatively impact the larger enterprises that supply them.
What happens next? Epstein believes that "entrepreneurs must heed this as a warning that more expensive and conservative cash is on its way." It appears that startups' business models and expectations may need to be revised to allow for this new reality. This, in turn, means slower growth and a longer road to Wall Street.
Related news, commentary, and predictions:
- Prediction: The USF VC Confidence Index will rise to 3.70 or greater in Q1 2008
- Mark Cannice: Venture Capitalists' Confidence Wanes
- Mark Cannice: China VC confidence index sees mild drop
- Mark Anderson: Chavez, China, and the coming startup squeeze
- Mark Anderson: Fixing the subprime mess: A Modest Proposal
- News: VC tech spending saw surge in 2007
Note: Anonymous comments on The Industry Standard are disabled. To leave a comment and participate in the Standard's prediction market, please register first.
Comments
Hi Mark,
I like to look for the opportunities in situations like this. Do you see any opportunities for start-ups and entrepreneurs in our current economy? Thanks.
Joe
Post new comment