July 7, 2009

Venture capitalists say smaller is better

Venture capitalists in California say hard times will force many of their breed to leave the business soon and that's not necessarily a bad thing.

Businessmen and women are rarely sincerely sorry to see a competitor close shop, but venture capitalist Alan Patricof, who was an early investor in Apple and America Online, told The New York Times Tuesday, Our biggest challenge today "¦ is to think smaller.

Patricof's firm Greycroft Partners has begun a program to do just that, earmarking $75 million for funding smaller start-ups.

Byran Roberts at venture firm Venrock said a ton of venture capitalists will drop out of the picture this year, and it's going to be painful for a while.

But the best thing that could have happened to venture capitalists is this economic crisis because it's lowering the flow of capital into these funds, he said.

The painful slowdown has already begun with venture capital investments shrinking to $4.3 billion in the first three months of the year. The first quarter of 2008 included $7.1 billion in venture capital investments, the newspaper said.