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.

Author:.

Dr. Kedrosky is currently the Executive Director of the William J. von Liebig Center in San Diego, California. Using an innovative seed capital program, the Center catalyzes the commercialization of technologies from the internationally-ranked University of California, San Diego. Dr. Kedrosky is also a venture investor with Ventures West, Canada's largest institutional venture capital firm, where he is most active in consumer technologies and software. He is currently on the board of Marqui Cor...

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