Are Venture Investors Not Meeting Their Capital Calls?
Last month, we talked about how the financial crisis might impact the venture capital community, noting that many more limited partners (LPs, or the folks who put money into venture capital funds) were looking to sell their stakes in the aftermarket. Bloomberg is now taking a look at the issue, noting that more than double the amount of stakes is up for sale compared to a year ago, basically confirming that a number of LPs are looking to get out of their commitments. One interesting tidbit is that, in many cases, this has nothing to do with losses from venture capital, but due to the rules that the LPs (pension funds or institutional investors) have on allocation. As we mentioned in the original post, most of these investors set aside a certain small percentage of their money for such high-risk alternative investments. The problem is that with the rest of the market collapsing, these investors overall portfolio has shrunk, driving the venture investments over the self-imposed limits —
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- Are Venture Investors Not Meeting Their Capital Calls?
