socialmedian: VCs (And Startups) Won’t Be Immune To The Credit Crunch

User-submitted headlines for this story

Clips

VCs (And Startups) Won’t Be Immune To The Credit Crunch

Source: TechCrunch

Sep 29, 2008

Summary

So far the downward spiral of credit and financial markets seems to have left venture capital firms and startups relatively unharmed. Even though the IPO market closed completely in the second quarter (and opened again only slightly in the third), venture capital firms continue to raise money and invest in startups at a healthy pace. During the first half of the year, venture capital firms raised about $16 billion in 141 funds and invested about $15 billion in nearly 2,000 deals.

But it is not clear how much of those funds already raised can be counted on. Generally, the investors in a venture fund (the limited partners) commit a certain amount of cash to each fund, but only pony up the cash when the VC fund needs it to make an investment. With wealthy individuals taking losses in the stock, credit, and real estate markets (the stock market is sharply down this morning, and even hedge funds are not safe), VC funds are already beginning to feel the trickle-down effects.

As investors suffer large losses elsewhere, they are not able to fulfill their commit

...Read the full article

Comments (0)

Add Your Comment