Throughout the financial crisis of 2008-09, most venture capitalists
wisely advised startups to hunker down. The best bet, they said, was to
lower expenses and, above all else, avoid fundraising in 2009, since all
eyes were on 2010 as the proverbial light at the end of the tunnel.
The advice, as it turns out, was somewhat short-sighted.
We are now 18 months past the height of the financial crisis. Back then, it didn’t require a doomsday-oriented PowerPoint presentation to know that difficult times lay ahead. The same, frustratingly, can be said today. This is a different capital environment, but it’s not necessarily any better. It’s just different – and it may be worse.
Because so many companies avoided fundraising last year, there is currently a glut of companies that likely need cash. Accordingly, the competition is fierce, and it includes many companies that didn’t grow much (if at all) in 2009. Many companies seeking funding in 2010 are (or soon will be) out of money, and as a result they’re in poor negotiating positions. Even good companies are fighting for one of history’s toughest investment pools.
To read the full, original article click on this link: 2010 VC market outlook: No cash for clunkers | VentureBeat
Author: Don Rainey
