When Times Aren’t As Rough As They Seem

I'm with you mjaybee, we need innovation and entrepreneurship in America. I believe that there is always money around for good ideas.

I think you are going to see a movement amongst LPs away from "alternative investments" such as private equity, and back to a mix of stocks and bonds, the latter providing a possibility of "preservation of capital", which seems almost quaint in today's climate.

I hope that is not the case. We need innovation and entrepreneurship in America. Unfortunately, VCs have been acting more as merchant banks than true "venture capitalists" as of late.

Thanks for clearing it up Farhad. I'll edit the post.

I actually said: "until VCs start returning money in their funds due to lack of investment opportunities."

Remember that VCs make their money from a ~2% management fee (for the whole fund under management) and a percentage of profits generated. So, they are loathe to return any money under management because it is "sure income" for them. However, if the "Good Times" are truly at an end, as some VCs have speculated, then what are they telling their Limited Partners (investors) as the reason for holding onto their money and charging a management fee?

So, asking VCs whether the good times are over, just gets you the biased perpsective of "buyers" telling you what they think the market looks like. Note, they have every incentive to tell you (entrepreneurs) that times are tough, valuations should be lowered and that you should take whatever offer then give you.

However, until I see money being returned to the LPs for lack of investment opps, my guess is that they're telling their investors a different story...

More like: Times are tough, but with our BS "Fearmongering" presentations we've scared entreps into lowering their valuations to a point where we are seeing incredible investment opportunities, blah blah blah (where blah blah blah basically = "so let us keep investing your money and earning our 2% fee).