Will the Credit Crisis Hurt Venture Capital?

Scott Shane throw a question in Small Business Trends asking if the Credit Crisis can hurt Venture Capital.

Recently, there has been some discussion of whether the credit crisis is helping or hurting venture capitalists.

The argument that it is helping holds that the credit crisis has made returns from venture capital investments more favorable than returns from other types of private equity. The high returns to private equity in the past few years were driven by inexpensive credit so taking away that cheap credit has brought private equity returns back into line with other investments.

Maybe. But I’m not so sure that the credit crisis is helping venture capitalists. There are several reasons to think not.

According to Scott, he has several reasons why it can't hurt.
  1. Exit through M&A
  2. IPO Drought
  3. VC Firm Operations
  4. Portfolio Company Performance
What are these four points above? Check it out in Scott's article - Will the Credit Crisis Hurt Venture Capital? and tell me what you think about it.

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