Venture Investors Face More Uncertainty

Though local venture capitalists remain optimistic about future deals, this terrorist strike riled the public markets and pushed an already weak economy to the brink of recession, particularly bad news for an industry that relies on ready capital and a steady stock market to make a profit. For the region's technology companies that are struggling for survival, that means there probably will not be a rescue by venture backers. Washington area venture investment rose in the second quarter of the year, according to industry surveys, suggesting to some that a decline of venture investment had hit bottom. Now, those rosy predictions seem a bit premature. Venture firms coped with the disruption of the past two weeks in a variety of ways. In lieu of travel, firms resorted to video-conferencing for meetings that could not be attended in person. And travel did resume for those who needed to see a client. Beyond the immediate effect of events in New York and the Washington area, the increased possibility of war and recession is expected to weigh on venture investing, delaying a rebound some had expected to see later this year. Nationwide, venture investment has been falling steadily since last year. The national VentureWire index has fallen 67.85percent in the past 12 months.