More and more attention is being paid to the state of VC funds and Angel money these days. A story in the Nashville local paper the Tennessean just this morning talks about the flow of cash into local VC funds has slowed way down.
Some Nashville-area venture capital funds trying to raise money are facing a tougher time as investors chase promises of quicker and larger returns from a hot private equity market.
A year after setting out to raise its latest fund, Massey Burch Capital Corp. decided this week to do away with those plans after getting commitments for only a quarter of the $125 million it had sought. And Salix Ventures of Nashville is yet to announce a closing a year and a half after it said it planned to raise a $150 million fund.
Even thought the media makes this sound horrible, it is really OK. Not to worry! As long as the politicians and bureaucrats stay out of this arena, and that is sounding like a big if right now, things will be alright.
Capital markets — if left alone — are very efficient. There has been way too much money going into the VC markets, so what is happening is an adjustment of supply to meet demand. The money that was going into VC funds is now flowing to funds seeking to take public companies private. That is where the supply of deals is right now.