Venture Capital—Nice if You Can Get It

Report finds first-quarter decline in start-up funding.


How is the economy treating venture capitalists? PricewaterhouseCoopers and the National Venture Capital Association analyze quarterly data on venture capital activity, and their report (.pdf) on the first quarter of the year is looking slightly negative. Seed and early stage investing was down 17 percent in the first quarter, falling to $1.7 billion via 330 deals.

But how much is this decline affecting small-businesspeople? There's a false conception that venture capital and start-up entrepreneurialism always go hand-in-hand. That's one of the myths Scott Shane of Case Western Reserve University goes after in his informative book The Illusions of Entrepreneurship, published earlier this year. Among other things, he says that the odds of a typical start-up getting seed-stage venture capital funding are about 1 in 4,000—lower than the odds of fatally slipping in your shower (1 in 2,232). But those odds might get even worse if this first-quarter contraction continues.

Jeff Cornwall over at Entrepreneurial Mind has some more thoughts on the report.


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