Credit Fallout Could Help Venture Capitalists
The sky is falling. The sky is falling. The ground is rising.
Could the subprime problems that have fouled the public market be a mixed blessing for Silicon Valley’s high-technology investors?
Highly out of favor in recent years, public offerings of technology start-ups are enjoying a mild resurgence. And some venture capitalists are arguing that the fragile momentum could be bolstered by the problems that mortgage-related securities have caused in the stock and credit markets.
The rationale is that technology investments, because they are far removed from credit-centric securities, could look relatively enticing.
“People are being scared away from other investment strategies,” said Keith Benjamin, a partner at Levensohn Venture Partners, a San Francisco firm that focuses on technology investments.
“The credit crunch can help venture,” he wrote on his blog. “One man’s ceiling is another man’s floor.”
Another concern is that tighter credit, by making it harder to borrow debt, could sap the ability of some larger companies to pay for and acquire start-ups. While technology investors would rather take their investments public than have them acquired, a potential dip in the mergers sector could hurt one of venture capital’s primary strategies for selling investments.
Photo by images.ctv.
Carl Zetterlund on August 31st, 2007 1:11 pm
That’s interesting. I didn’t think of that connection. I’ve just been watching everyone run around with their chopped off.
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