A year after the collapse of Lehman Brothers, venture capital investors continue to emphasize belt-tightening and investing only in companies that have the very best chances to succeed, says an article on the Venture Capital Dispatch in yesterday's Wall Street Journal.
The article is based on a panel discussion on "Keeping Portfolio Companies Alive and Thriving," at the Dow Jones Private Equity Analyst Conference in New York last week.
"If you're not getting escape velocity, that company should be sold or closed," said Kate Mitchell, a managing director with Scale Venture Partners. While there's still a willingness to invest in portfolio companies that are doing well, Mitchell said "there's a lot more dialogue about whether it's too early or too late" to try to accelerate a company's growth.
"The best CEOs are very cognizant of how hard it is to get new funds and [are] adjusting their spending accordingly," said David Lane, a general partner with ONSET Ventures.
Not all the talk on the panel was negative. All panelists saw opportunities for companies to succeed during the recession, but the concept is the need to be very selective.
It's anyone's guess as to how long this attitude will last among venture investors.
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