Venture Capitalists Have Their Worst Quarter Since 1999


What VCs worry about most these days, according to a survey by Polachi Inc., are “Exits — when will they return?”


There’s plenty good reason for all the nail-biting.

The exit numbers from Q2 were not good, reports Dow Jones VentureSource. :

  • Liquidity flowing into venture-backed companies fell 57% from Q2 2008 to Q2 2009, from $6.48 billion to $2.8 billion.
  • Second quarter liquidiity also fell 60% from the $6.48 billion raised in Q1 2009.
  • The 67 deals during the quarter was the lowest quarterly total since 2009.
  • Venture-backed companies sold for median average of $22 million — down 46% from the $41 million average during Q2 2008.
  • All this despite three VC-backed IPOs in Q2, after only one in the prior 13 months.

Union Square Ventures partner Fred Wilson, who participated in the Polachi study, writes on his blog:

The problem with the VC industry is that there is too much money in it, too many portfolio companies, weak venture firms, and a tepid exit environment.

Nothing is wrong with the VC business and the startup ecosystem that a few years of weak fundraising can’t fix. And I think we are seeing that and will continue to see it.




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