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Altman, who focuses his investments on medical device and biotechnology companies, says venture-backed startups must make their money last longer. Their financial backers also must reserve more capital for portfolio firms, which may result in fewer investments overall. The current crisis, he notes, coincides with the ongoing drought in initial public offerings. That it means it will likely be years before all but the most exceptional startups can contemplate going public. "If you go two or three years with almost no IPOs, you have more companies sitting in your portfolio for longer," Altman says. "And the longer it takes to complete an exit, the more cash they will need." Although strategic acquisitions offer another means for VCs to exit their investments, Altman says that M&A activity is also likely to slow. The companies with the most cash may remain as acquisitive as ever. But average businesses with limited cash will find it harder to raise debt for acquisitions and will likely be reluctant to use their undervalued stock to fund deals. Altman adds the situation could become "dangerous" if exit time frames get too prolonged, but for the moment he's trying to be patient and conserve cash so that his portfolio companies remain in good shape when exit opportunities do surface. "They may just have to wait longer for an exit," he says. "But ultimately, we will need to make returns on our investments." -- Andrea Orr
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"It is a huge concern," says 
