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Amid Fiscal Uncertainty, Venture Capital Is Way Down In Silicon Valley

Posted by samzenpus on from the holding-the-wealth dept.

Hugh Pickens writes "With the 'fiscal cliff' just weeks away, Chris O'Brien writes that venture capital fundraising in silicon valley is down, the amount invested is down, the number of folks investing in venture capital is down, and the number of VC firms and partners are down. 'The people I talked to in the industry sounded grim even as they tried to make the case for optimism,' writes O'Brien. 'Still, it remains difficult to identify a clear path for turning things around for the battered venture capitalists who make Silicon Valley hum.' So what's wrong with the VC industry? The problems are many and complex but they can be boiled down to one thing: Not enough exits. For the size of venture capital being raised and invested, there simply aren't enough initial public offerings of stock or mergers and acquisitions to generate the returns that funds need. Venture insiders blame the global economic uncertainty. They believe that is part of the reason that giant corporations, which have amassed huge piles of cash, are just sitting on it, rather then using it to acquire startups. 'The numbers are way down,' said Ray Rothrock, a partner at Venrock. 'All these companies with these fantastic balance sheets, and nobody is really buying anything. With all the uncertainty they're facing with the economy and taxes, buying little companies is way down on their list.'"

1 of 421 comments (clear)

  1. Re:Good. by feedayeen · · Score: 1, Troll

    Yeah, because taxes are SOOOOOooo much lower in Canada and the EU than in the U.S.

    Well...actually, yeah in parts of Canada they are. And if the $7b in taxes goes through at the start of next year happen, I'm sure those of us up in Canada will see American companies flocking to Canada.

    You know, 7 billion in taxes is only about 200 bucks to each Californian. How much do you think it costs a company to move out of a state even? My guess is that for a small company it'd be on the order of tens-of thousands, without factoring in training costs and lost profits during the transition.