Venture Capital Outlook
There has been a lot of interest recently in the level of venture capital investment activity that can be expected over the near term in light of the recent meltdown in the credit and capital markets. Through the third quarter of 2008, investment activity seems to have held up pretty well, but what will the future bring? I’m no fortune-teller, but based on what I’ve been seeing and hearing, I can hazard a few educated guesses:
- There will be a slowdown in activity as investors wait for the economic picture to stabilize.
- Seed rounds and Series A rounds will continue to get done for promising companies, but at reduced valuations and with more onerous terms.
- Follow on rounds will become harder to do, and will more often be internally led.
- Down rounds will become more prevalent.
- Bridge financings will serve as the finger in the dike until denial progresses to acceptance.
One potentially positive note for emerging companies that may arise out of the current economic situation: engineering and other technical talent may become easier to find and less costly to recruit.
