After a long and brutal downturn, there is finally light at the end of the tunnel for beleaguered venture capitalists and a number of the promising startups they have financed. The reason: Mergers and acquisitions are certain to climb over the next 18 months and fetch prices for startups that will reinforce the role that venture capitalists play in a capitalist society. They do, in fact, help build value over time by nurturing the growth of promising young technology companies, and in the process make money for entrepreneurs, employees and their limited partners.
It’s about time things started to look up a bit. We have finally reached the end of the worst slump in the history of information technology. To paraphrase Charles Dickens, in recent years we have lived through “the age of foolishness and the epoch of incredulity.” More than 5,000 new startups were financed by venture capitalists, many at incredible valuations and with no products in sight, let alone revenues. The IPO window has been shut drum-tight for 2 years and M&A activity has also been severely depressed. The latter is poised to change, however, setting the stage for better times. A substantial increase in strong liquidity events is the elixir required to restore the confidence of venture capitalists and help Silicon Valley, the global center of technology innovation, begin rebounding.
Subscribers can read the rest of story in the the