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Venture Capital & Recessions

Written by: Paul Kedrosky

Article Overview: Lots of talk in the venture business, as everywhere else, about the impact of recessions on the business. In general, recession vintage venture funds have been among the better-performing funds. Here are some related points:

Venture Capital & Recessions

Lots of talk in the venture business, as everywhere else, about the impact of recessions on the business. In general, recession vintage venture funds have been among the better-performing funds. Here are some related points:

Recessions reduce the flow of startups
In weak economic times you have to fund early-stage companies for the cycle, assuming no-one will follow on
Some of the best deals are done in and around recessions: good teams, good prices, and exiting during an upturn
Timing venture capital investments, given its long horizon, is like trying to use a supertanker as water-ski boat
The difference this time? People aren't thinking through what troubles at institutional investors is likely to do to the flow of capital to the venture business. Because the VC GP winnowing that is currently underway is going to accelerate.

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Article Tags: best deals, early stage companies, economic times, exiting, gp, horizon, institutional investors, recession, recessions, ski boat, startups, supertanker, upturn, vc, venture business, venture capital investments, venture funds, water ski, winnowing



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