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  • Nothing Ventured, Nothing Gained

    Some venture capitalists actually look at the shrinking of their industry as a good thing.

    The crucial cash-out time for venture capitalists may be picking up. But a report by Dow Jones LP Source released Wednesday reinforces the feeling that venture capital is going to be a place where smaller firms with smaller funds make smaller bets in the future.

    Funds flowing to venture capital from investors, called limited partners, fell in 2010 from 2009, to $11.6 billion from $13.5 billion. That points to the shrinking industry many venture capitalists have expected for the past couple of years.

    But it doesn’t necessarily mean that smart entrepreneurs won’t be able to find money for their startups. That’s still available, though not in the overabundance of the dotcom boom days.

    In fact, some venture capitalists actually look at the shrinking of their industry as a good thing. It forces them to be smarter about picking promising companies and allows a bigger return on smaller investment.

    At the same time, the startups themselves, because of advances in cloud computing and the availability of outsourced talent—among other factors—are able to get off the ground for less money than was the case in past years. That means they don’t need great big investments from venture capitalists—or at least, not as much as they have in the past.
    Read more:

    http://www.portfolio.com/views/blogs/daily-brief/2011/01/13/will-falling-vc-investment-hurt-entrepreneurs#ixzz1C59f5xLU

    Filed Under: Startup/Entrepreneur

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