The confluence of poor current economic conditions and lower VC confidence in the future portends a difficult financing challenge for entrepreneurs in the near term. This doesn't mean funds aren't available. Debra Beresini of invencor said many venture firms actually have money to invest in startups. Most, however, "are holding onto cash," she said.
So should entrepreneurs give up hope on attracting venture capital now? Not necessarily. Some responding VCs argued that hard economic times are a great time to build a stronger, leaner company. Dag Syrrist of Vision Capital offered, "in hard times we generally make better investments, companies make better decisions, cash lasts longer and great companies are formed." Sometimes it pays to swim against the tide.
So will VC confidence rise or fall in Q3? I encourage Industry Standard readers to reflect on the expert insight of the venture capitalists I directly quoted in my Industry Standard essays and quarterly reports, and offer their own analysis here.
More news, commentary, and predictions from The Industry Standard:
- Prediction: Internet stocks tumble to yearly low
- Mark Cannice: Silicon Valley VC Confidence Index falls to four-year low
- Mark Cannice: Startups look to business plan competitions
- Mark Cannice: The impact of Bear Stearns' collapse on entrepreneurs
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