| Venture capital plays a vital role in the launching of | | | | experiencing. The crisis started in 2006 with 2007 |
| businesses in the United States. It fills a funding niche | | | | showing the first real scary statistics. 2008 was even |
| for many businesses that would have no other | | | | worse. Nobody knows about 2009 because it is too |
| access to the capital required to grow. Given this | | | | early to tell, but nobody is very optimistic. |
| fact, it should be considered troubling that the | | | | So, what is the crisis? Well, the venture capital |
| venture capital industry is in crisis. | | | | industry has contracted a lot. The numbers have |
| Venture capital plays a huge role in the launching of | | | | fallen from 1,019 venture capital firms to 868 as of |
| vital businesses. It is by far the biggest individual | | | | 2008. That number has undoubtedly dropped even |
| funding source for technology companies, for | | | | more in 2009. The problem is the number of funds |
| example. Consider the story of Google. The search | | | | put together by these firms to invest in companies is |
| engine is only a little more than 10 years old. How did | | | | dropping dramatically as well. Of the 868 firms that |
| it grow to become the dominant force on the web in | | | | existed in 2008, 828 had only launched one fund for |
| such a quick time. Yes, it is the best search engine in | | | | investments in the previous eight years. One fund |
| the mind of most people, but that isn't enough. It | | | | provides capital to between 10 and 20 companies. |
| needed capital to hire employees, build out server | | | | What does this all mean? The answer is unclear. As |
| centers and undertake all the daily, costly tasks | | | | other parts of the world such as China and India |
| involved in building a small company into a large one. | | | | grow economically, the investment money may be |
| Without VC, it never would have pulled it off. | | | | flowing to them. What is clear is there is less of it in |
| The venture capital industry in the United States is in | | | | the United States. In these troubled economic times, |
| crisis because it is contracting. This is not just a | | | | that simply is not good news. |
| measure of the economic problems we've been | | | | |