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At the end of the day, if you're a VC you've raised a fund to invest, not sit around and wait to see what happens. What is the outcome one could hope for by no

At the end of the day, if you're a VC you've raised a fund to invest, not sit around and wait to see what happens. What is the outcome one could hope for by not investing in promising companies? Waiting for lower valuations? Weeding out the riff-raff? Is that the best use of a fund's time? There are going to be good and bad companies no matter what the rest of the economy looks like. Figure out your thesis and stick to it when you invest. But don't just sit there.

chailatte 15y ago
If you notice that it's a horrible market, the sensible thing to do is to return the investors' money. Look at Carl Icahn recently.
deleted 15y ago
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meterplech 15y ago
Startups aren't completely independent of the market. They either seek to IPO or be acquired by a company. Both of these possibilities are highly dependent on the availability of excess capital. When the market goes down, acquirers & potential IPO purchasers have less capital. This doesn't mean it affects an entrepreneurs day-to-day life, nor should it. But, VCs by definition invest until they can get an exit. If the IPO and M&A market dries up, it is harder for them to get an exit, and thus they are less likely to invest.
pedalpete 15y ago
I think part of Mark's point is that they need to reserve funds for the portfolio companies which will need another cash infusion. They've already invested x in company A. If company A needs another 2 million to reach profitability, they may not be able to raise it from another firm. The VCs are being prudent and cautious to ensure that they can keep their existing portfolio companies going. Remember, they aren't looking for 10x returns, they're looking for 100x+ returns. They know their is risk for their portfolio companies and need to make sure they look after their current investments before bringing on any new investments.
SkyMarshal 15y ago
>What is the outcome one could hope for by not investing in promising companies? Waiting for lower valuations? Weeding out the riff-raff? In a nutshell, not losing money. Sometimes doing nothing has a higher expected payoff than doing something. Even promising companies are vulnerable to a financial crisis of this severity. http://news.ycombinator.com/item?id=2848041 http://news.ycombinator.com/item?id=2848041

chailatte 15y ago

If you notice that it's a horrible market, the sensible thing to do is to return the investors' money. Look at Carl Icahn recently.

deleted 15y ago

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meterplech 15y ago

Startups aren't completely independent of the market. They either seek to IPO or be acquired by a company. Both of these possibilities are highly dependent on the availability of excess capital. When the market goes down, acquirers & potential IPO purchasers have less capital. This doesn't mean it affects an entrepreneurs day-to-day life, nor should it. But, VCs by definition invest until they can get an exit. If the IPO and M&A market dries up, it is harder for them to get an exit, and thus they are less likely to invest.

pedalpete 15y ago

I think part of Mark's point is that they need to reserve funds for the portfolio companies which will need another cash infusion. They've already invested x in company A. If company A needs another 2 million to reach profitability, they may not be able to raise it from another firm. The VCs are being prudent and cautious to ensure that they can keep their existing portfolio companies going. Remember, they aren't looking for 10x returns, they're looking for 100x+ returns. They know their is risk for their portfolio companies and need to make sure they look after their current investments before bringing on any new investments.

SkyMarshal 15y ago

>What is the outcome one could hope for by not investing in promising companies? Waiting for lower valuations? Weeding out the riff-raff? In a nutshell, not losing money. Sometimes doing nothing has a higher expected payoff than doing something. Even promising companies are vulnerable to a financial crisis of this severity. http://news.ycombinator.com/item?id=2848041 http://news.ycombinator.com/item?id=2848041