Venture capitalists finding little call for deal-making - South Florida Business Journal:

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So far this year, it hasn’tf done a single one. “It has slowedf down for us,” said Dan Fleming, a River Citiea managing director. “We are being extra careful. We’rer looking for any company that’s able to grow in this economic climate.” That’s the problem. And the downtown-based companh is about the only local venturw capital firm that has a new fund loaded with cash to tap for It finished raisinga $120 million fund in Marcjh 2008. New deals at have slowed to a too. “The economic climate is influencing everything,” said Jack Wyant, a Blue Chip managing director.
Blue Chip has been makingv small investmentsof $250,000 to $1 million out of its Validationm Fund, Wyant said. But the largef deals of $5 million to $15 million are slow. Most locao venture funds’ new investments have become saidDavid Willbrand, venture capital partner at downtown law firm . “We haven’t seen many dealws in the lastsix months,” said Willbrand, who trackss such local activity for the . The local fund are not alone. The number of ventur e capital deals nationally plunged 37 percent in the firstg quarter compared with the fourth according to the MoneyTree Report from andthe .
The dollar valuee dropped 47 percent, and it was down 60 percen t from ayear ago. The $3 billion that venturr capitalists put into 549 deals was the slowesyt activitysince 1997. A big part of the problejm for venture funds is the inability to get out of their investments. The exits are closed. Try takingg a company public. Just 11 IPOs nationally have taken place this year throughJune 2. That’s down 85 percent from a year ago. And the IPO marke t is a key exit strategy forventure funds. Acquisitions, another common way for venture fundx to exitan investment, are also on the rocks.
It’ds all backing up ventur funds and making it tough for them to donew “We have six to sevejn companies primed for exit, but there’s almostf no exit market existent,” Fleming said. Willbrand said the inabilityu of funds to get out of old investmentsw is holding up new The longer funds stick withan investment, the more moneg they need to put into it. many of those companies have problems as theeconomhy slows. “Our main measuring stick is time-weighted returns,” Fleminvg said. “When time stretches out, the (internal rate of return) goes Slow exits also make it harder for venture fundsx to figure out the value of a potentianew investment.
“Their ultimate return depends onthe exit,” Willbrand “With no good data, it turns the risk knob up