Venture Capital Industry Prepares for ‘Darwinian Year’

Next year will be a very challenging year for venture capital firms and start-up companies, according to Mark Heesen, president of the National Venture Capital Association.

“We’re looking at 2010 as an opening year for good things to happen, but 2009 is going to be rough,” he added.

Heeson calls 2009 a ‘Darwinian year’ for venture capital firms and start-ups, and he predicts a closed IPO window until 2010.

“You’re going to see the strong survive,” he said. “Entrepreneurial companies, some of them are going to be let go, and you’re also going to see venture capital firms, some of them not being able to make it in 2009.”

Of the 400 venture capital firms Heeson's organization recently surveyed, 92 percent expect to spend less in 2009 than they did in 2008.

From a long-term perspective, Heeson did single out one promising area for venture capital.

“If there’s one silver lining here, it’s clean tech. Venture capitalists see this as quintessential venture capital. It’s a huge potential market, consumers are begging for a fundamental change here and governments around the world are saying we need change as well.”

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