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The Current Paradigm Shift For Venture Capital Firms

Written by: Ellisa Brenneman

Article Overview: Currently, the state of funding for start-ups from a venture capitalist seems to be on the wane. The keyword there is “seems.” Once again, what is actually happening in the realm of business and what is being perceived to be happening in the realm of business are too very different things.

The Current Paradigm Shift For Venture Capital Firms

Currently, the state of funding for start-ups from a venture capitalist seems to be on the wane. The keyword there is "seems." Once again, what is actually happening in the realm of business and what is being perceived to be happening in the realm of business are too very different things. The assumption is that a venture capitalist doesn't want to put any investment capital out there since they're afraid of the market's current state. Things to keep in mind about the current climate is that there is no basis for comparison to use when saying, "In the past when the economic downturn has been this bad..." is pretty much useless since an economic downturn of this caliber has never existed along the advent of technology like it is today. This is a cycle, yes, but it's also never the same cycle twice. Every time an event like this happens in the financial world, there are always factors that are in play to make it a different setting than the last time we were at this point.

For instance, during the post-2000 internet implosion, we were witness to two landscape changing events of the time: The inherently great start-ups and late-stage opportunities were shown to be able to survive even if they were weakened by the crash. Also, we saw the web become a place of imagination as well as innovation as opposed to just a new advertising marketplace. Social networking, video aggregators, etc. all were new additions to what was thought to be a fad market that died as quickly as it ballooned. Here we are today and we're most likely going to see yet another renaissance of people who come up with an idea that doesn't even exist for comparison and can gain ground in a competitive landscape that is devoid of rivals.

Things to be keeping in mind in this new economic landscape is that the economic recovery plan from the Obama Administration will play a factor in allowing for any productivity-enhancing information technology to become a sought-after investment opportunity. Also, survivors of this recession will be seen as strong companies that should maybe be given some working capital investment in order to keep thriving in the years ahead. Domestic clean energy will also be an area that investors will be looking at since now is the time to start moving away from oil and coal and other fossil fuels as the dependency on those resources has shown to be a severe detriment to the United States.

There are options out there and there are venture capitalists who want to invest in those options. Now is the time to be meeting these demands and showing why your company is deserving of funding from a venture capitalist or private investor. Either have an innovative idea that actually breaks the mold instead of imitating it, capitalize on the need for energy demands, or make it so your company survives this recession to live to fight another day and you will be able to seek the monies from the VC's that are patiently waiting to put up funding.

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