Venture Capital - Financing in recession

As you can imagine, the recession and the implosion of credit markets has been just a bit 'of an effect on venture capital angel investors and markets this year. For those wishing to start-up businesses or expanding, the outlook is decidedly mixed.

I must tell you that the implosion of 2008 and 2009 led to the strangulation near many niches in the financial markets. Strangely, the capital investment risk was not one of those markets has been shaken to its core. Do not get me wrong. Things were bad, but the slowdown in investments in venture capital was in the teens as a percentage instead of a much larger number as most of the markets. Angel Investing, unfortunately, was crushed for the most part with interest rates fall by 30 percent or more.

Well, just the past. And the future? After all, we all read and heard we are now in a recovery from the Great Recession. To say it's a tepid recovery may be a mild understatement. The simple fact is the financial world is still at a stand still. For example, most banks have failed in 2009 through 2007 and 2008 together. That does not make a solid platform from which to launch in 2010. So, what can we expect?

2010 will be a brutal year for start-ups. Venture capitalists are risk adverse right now, which means that few will be interested in taking on the risk of a brand new business. Unless you have a proven start-ups turn into a big winner, do not hold your breath on VC funding. The same goes for angel investing. The year is going to be around friends and family investments or simply wait for things to go on the capital markets risk.

What about existing businesses looking to take the next step? VC firms and angels are going to be much more receptive to requests for companies that have a history. This does not mean they will be delivering the money right and left, but it means you have a chance. As usual, this is where the idea seems plausible in a time when things are very difficult.

The venture capital markets are not dead. Not even close. That said, there are plenty of fish in food competition in that market. Things eventually dissolve, but can be a bit 'of time before that happens .......