VC Investment on Hold, Awaiting…

 An article from the Journal of New England Technology caught my eye today for the fact that, earlier this week I posted on the status of "equity overhang", in which the amount of capital that has been raised but not invested has reached an all-time high.  Two New England-based venture funds, Velocity Equity Partners and Venture Capital Fund of New England, have suspended their fund-raising efforts. They follow Prism Ventures, who has also stopped raising funds.  However, unlike Prism, who have indicated that they will use existing funds to invest in four or five new companies, Velocity and Venture Capital Fund will use existing funds to only support current portfolio companies.

The timing in the venture capital right now appears to be who can hold off longer in making investments in new companies, with the pressure to delay coming from an apparent concern that the economy and/or financial markets have not quite hit bottom yet, while the pressure to invest is building as recent economic data suggests that job loss has truly begun to slow (or stop in some sectors), company earning data is surpassing expectations and other developments indicate (as projected by diverse prognosticators) that the economy will be rebounding in the third quarter at anywhere between a modest and an aggressive rate.

It therefore seems to be the calm before the storm, or the darkest before the dawn, depending on your VC perspective.

See the MedMarket Diligence Medtech Startups Database on newly formed medtech companies, who are probably waiting just as anxiously as the VC to see when things start turning positively.

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