Venture capital funds slimming down

Mitchell Hartman Jan 20, 2009
HTML EMBED:
COPY

Venture capital funds slimming down

Mitchell Hartman Jan 20, 2009
HTML EMBED:
COPY

TEXT OF STORY

Steve Chiotakis: Well, 2008 numbers are out for venture capital funds. The amount of money raised for start-up and growth-stage companies was down by 21 percent from 2007, and there were fewer funds actively raising money to invest. From the Entrepreneurship Desk at Oregon Public Broadcasting, Mitchell Hartman reports.


Mitchell Hartman: Venture capital funds sat on the sidelines in the fourth quarter of 2008, raising just one-third as much money as a year earlier.

Mark Heesen, president of the National Venture Capital Association, says the drought will continue in 2009:

Mark Heesen: We will see less investing going on, fewer new funds being formed, and unfortunately you’ll see fewer entrepreneurs getting early-stage money.

Part of the problem is that venture capitalists still have a lot of money tied up — trapped, really — in start-ups they’ve already invested in.

Heesen: Companies that we thought would have been acquired or have gone public buy now, venture capitalists continue to have to work with those companies and to fund those companies. And that gives them less time, and less money, to go out and invest in new companies.

But, Heesen says, entrepreneurs with a proven track record and a market-ready product should still be able to find funding, even in the downturn.

I’m Mitchell Hartman for Marketplace.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.