Venture Exits (Again)

I've written about this before, as have so many others, but it bears repeating: the possibility of exits, and lucrative ones at that, are at the heart of the venture capital market. In that light I want to draw attention to this blog item by Om Malik.

No IPOs and no acquisitions mean no appetite for investment. Until investors, both angels and VCs, replenish their coffers by liquidating current assets, and do it at break-even or better, nothing will continue to happen in Ottawa as elsewhere.

Counterintuitively, if you do believe in this sector then this would have to be a terrific time for investors to become more active. Valuations are about as low as they can go, which means they can get a larger slice of start-ups and increase potential returns. This brings to mind the old market cliche that when there's blood in the streets, buy!

Will investors see things this way? Probably not. Indeed that is one important reason why valuations are dreadful for both public and private tech firms - no buyers, just sellers. It takes a lot of faith or insight (or both) to operate counter to the prevailing trend. Yet I could not advise anyone to take the risk since it is so difficult to tell whether that dim glow in the distance is light at the end of the tunnel or a trick of the eye.