Various conversations with Venture Capital firms and banks have started to get me worried that capital may be drying up somewhat. I have not yet evidence of the phenomenon for the companies I work with, however private equity professionals are clearly positioning for reduction in liquidity: limited partners are on hold. Thus available funds are primarily committed to the companies already in the portfolio, which are also requested to reduce or limit their run rate, to survive an extra 6 to 12 months with the same cash amounts. Even funds with lots of cash start waiting in the hope of getting better deals soon.
It seems we are still far from the situation that prevailed back in 2002 when seed and 1st round funding was very scarce. Even funds that were supposed to provide Venture Capital had turned to LBO’s or taking quoted firms back to private. It took 2 to 3 years before things went back to normal. The irony then was that VC’s started complaining from 2004 about the reduced dealflow, given the lack of funded start-ups in the past 3 years.
I am interested in evidence and testimonies about reduced availability of funds in France and Switzerland. If you have information in that respect, please drop me a note using the contact section of the site.
Thanks!
Jean-Philippe Lallement
