Technology entrepreneurs and the venture capitalists who back their businesses tend to feel insulated from earthquakes that shake the public markets. Certainly, the lack of an initial public offering market and depressed M&A activity over the past several months have been worrisome, but venture capitalists tend to invest on a five- to seven-year time horizon, and one would hope that's a long way from the current troubled times.
Yet with the economic and financial problems having reached historic proportions, VCs last week acknowledged that the current crisis could indeed take a toll on private company finance by reducing available funding for startups and, as a consequence, stifling innovation.
"People are going to be more conservative," said venture capitalist Fred Wilson, whose New York-based Union Square Ventures backs microblogging firm Twitter Inc. and other Web. 2.0 startups. "There are times when people want to take risks and times when people don't want to take risks. Clearly, no one's going to want to take risks right now."
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