Venture capital shops had a rough 2008 and are bracing for another challenging year, according to report released this morning by Thomson Reuters and the National Venture Capital Association (NVCA).
The upside is that VC firms aren't decimating their payrolls.
The fall's economic maelstrom virtually drowned the IPO and M&A markets, dunking the Venture Economics private equity performance index down 20.9 percent in the last quarter of 2008. And the NVCA's 460 member firms don't expect deal-flow to improve quickly, according to the spokeswoman Emily Mendell.
"Even if the (IPO) window opened wide tomorrow, it would still take awhile to get the pipeline flowing again," she explained. "That said, I think VC will do better than other asset classes."
However, VC's are small and nimble enough to avoid major layoffs; and some are still hiring. There are about 7,500 venture investors in the U.S., according to NVCA, with most shops functioning with only eight or nine workers. While those folks don't have IPOs to polish up, they still have portfolios full of companies that need their attention.
"VC's hire a lot of associates and principles out of business schools and those jobs are still there," Mendell said. "The work still needs to get done."
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