Is it significant that a venture firm like Atlas is leaving Europe?

Venture funds and private equity funds are businesses like any other kind of business and they have deal with the reality of the economic climate when running their businesses, so they need to watch their bottom line, cut their overhead, consolidate their costs, and readjust their expectations and operations to roll with the flux in the market. I think Atlas’s move is as related to that as it is anything else. Though they have been in Europe for a long time, Atlas is fundamentally a US business, and no doubt they have had to look at that when they assess their business.

What impact, if at all, does this have on the venture/startup community?

This general trend towards belt tightening and a lessening appetite for risk on the part of the venture funds and their LPs does have an impact on the lifecycle of business development and entrepreneurship. This is particularly noticeable and acute as the types of businesses seeking funding are money intensive and increasingly complex businesses in areas such as biotech, medtech, and cleantech.

These businesses would benefit for VC involvement at an early stage to ensure that the research is turned into something useful, but finding funds willing to invest in the earliest stages is increasingly difficult.


28 January 2010

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