Sinking Market Forces New Venture-Capital Strategies

Analysts don't see money drying up, just more scrutiny on where it's spent
By Jonas Oransky,  Newser Staff
Posted Apr 3, 2008 4:25 PM CDT
Apple CEO Steve Jobs, left, hugs venture capitalist John Doerr, right, with the investment group, Kleiner, Perkins, Caufield & Byers.   (AP Photo/Paul Sakuma)
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(Newser) – Venture capitalists are watching economic indicators carefully, trying to find safer places to put their mountains of money, CNET reports. The stats on first-quarter VC activity will land soon, and though experts don't expect dollar totals to have waned, players are “under pressure to invest in quality companies that have a clear business model,” one watcher said.

The number of venture-backed deals is way down, CNET adds. VCs are looking twice at “new start-ups like two guys in a garage,” another expert explained—and older companies need additional rounds of financing to stay afloat. And a Microsoft-Yahoo merger would hurt, analysts believe, as there would be one fewer giant company to snatch up start-ups.