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.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.