If you believe the venture capitalists on Friday’s conference call about the latest MoneyTree Survey results, which covers venture investing in the second quarter, now is the best time to contact them with your ideas. Just because the exit environment is brutal doesn’t mean VCs won’t continue to put their time and dollars into seed and early-stage deals, two of them said. And so far the data bears that out. But if the exit environment stays grim, early-stage fundings will drop as well.
Venture capitalists invested $7.39 billion in 990 deals in the second quarter of 2008, according to a report from PricewaterhouseCoopers and the National Venture Capital Association based on data provided by Thomson Reuters. That’s slightly less than the first quarter of 2008, when $7.5 billion was invested in 977 deals, and flat compared to the second quarter of 2007, when VCs placed $7.37 billion into 1,033 deals.
John Taylor, VP of research with the NVCA, said that there’s no need to sound the alarm on the exit environment just yet. He also noted the fact that IPOs are more difficult to complete than they used to be. Taylor tied the inability to take a company public or sell it to “fears of the macro economy” and a market that’s unwilling to bet on early-stage companies. But he expressed confidence that once investors realize that the overall tech sector is strong and resilient, in part because it has global exposure, “the slowdown in the exit market will stop.” Read More about With Exits Barred, VCs Keep Investments Flat