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.
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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