Venture Capital Down 50%. It’s Not Just the Recession, Folks.

pg · on April 18, 2009

Note this much more detailed analysis, lurking down the page with a lower score due to its lack of a linkbait title:

http://news.ycombinator.com/item?id=568060

ed · on April 18, 2009

From what I hear most viable start-ups (those with traction) are having an easy time finding VC. It's the 2nd and 3rd tier companies that can't find capital.

bokonist · on April 18, 2009

They’re not sure how to do their jobs anymore when nothing can go public and acquisitions are few and far between.

Dividends.

banned_man · on April 18, 2009

I think it's time for VCs to become (lacking a better word) nicer: throw multiple liquidation preferences on history's scrap heap, start paying startup's legal fees instead of making the startup pay theirs, and allow founders to have more control of their company. VCs and entrepreneurs should meet on equal footing. The VC should not be the boss in the corporate sense; he's a client, and the entrepreneur is a wealth manager.

If VCs make the process unpleasant for startups, they're going to be smashed by selection bias: marginal startups will deal with them, but the great ones will hold out until they have so much traction that they don't need VC, and can dictate the terms to investors rather than the other way around.

An example of this would be the infamous multiple liquidation preference. If a company is in such a defeated state that it would accept a deal with a multiple liquidation preference, your likelihood of losing the principal is extremely high, and you probably shouldn't make the deal at all.