USA: Venture capital drying up for IT firms - PC Retail

USA: Venture capital drying up for IT firms

Shift away from long-term investments may see innovation stagnate
Author:
Publish date:
Social count:
0
7_CPW_InStore_CouchLaptop.jpg

The on going troubles on Wall Street may cause long term problems for the IT sector as Venture Capital funds for start-up businesses dry up.

Last year, there were 186 venture-backed Initial Public Offers (IPOs), often issued by smaller, younger companies seeking capital to expand; so far this year there have been only six.

For the first time since 1978, there were no venture-backed IPOs issued in the second quarter of this year.

The lowest performance for the IPO sector in thirty years has been further exacerbated by the recent problems with Lehmann Brothers and Bear Stearns as Venture Capital has shifted from long-term investments to the current frenzy around the Mergers and Acquisitions sector.

Warning of economic stagnation, the National Venture Capital Association’s president Mark Heesen said: “These are the companies that really create jobs and move the economy at the end of the day.”

Source: Computer World

Related