Venture Uncapitalism?

It would appear the Limited partners in VC Land (those wot stump up da Loot) are in more reduced circumstances, and this is also partly what is driving the current spate of VC Dire Warnings as much as rational look ahead views in the market. Sez SAI:

This economy has the potential to become the worst economy since the Great Depression (it isn't yet, thankfully). VCs see this and understand that:

1. Profitable exits are going to be a lot rarer in the next couple of years, and
2. Potential investments--including current portfolio companies--are going to get a lot cheaper in the next few years (and, therefore, returns on future investments are going to get a lot higher than today's) .

That logic alone explains why money has gotten so tight so fast. But VC sources say there's also another important dynamic going on: The folks who supply the money that VCs invest--Limited Partners such as pension funds and endowments--are now strapped for cash because the values of their own portfolios have plummeted (and so many of the investments are illiquid). Some are reportedly beginning to default on or defer commitments. In VC-land, in other words, as elsewhere, the oxygen is being sucked out of the room.

Actually, this last point explains the timing of the Doom Sirens far better though. Any eedjit could see, say 6 months ago, that Things Were Getting Tougher. But to the best of my knowledge there was little concerted push towards frugality then in the industry. No, the jungle drums only started to beat the retreat after The Crunch in October, when it was clear that the upstream flow of cash was bolting.

( And before you lynch me - yes, there were smart people who were doing it already, yes there were smart VC's who were warning clients ages ago - but they were definitely ahead of the (wise) crowd )