Bottom line, it has been a dismal quarter for venture capital firms raising money. Total of 17 firms raised 1.557 Billion dollars with three firms raising 65% of that. Visit this link, an article by Jay Yarow at the Silicon Alley Insider to get the details along with a quarter by quarter chart of the last two years.

Yarow writes, “It’s an 81% drop from a year ago, and a second quarter of declines.”

What does this mean?
1. It will be harder to get money from venture capital firms since they are having a harder time raising money. Smaller supply means smaller opportunity.
2. Firms looking for capital will have to fight harder and focus more on the points of my model rather than just wing it.
3. Firms already with funding from venture capital firms will be more likely than firms with out venture capital funding for getting more funding. VCs rather bet on what they know than the unknown. However, this does not mean the money will be easy for these already funded firms.
4. Firms will have to find alternative routes to getting funding; or will have to focus more on organic growth (sales) than anything else to get larger. With this economy it is going to be even harder.

This blog is about how investors qualify entrepreneurs and how entrepreneurs can attract investors. However, if you think about it, if the firm is good enough for investors it may not need them. Ultimately, you can use the information herein to figure out how you can avoid using investors, or put yourself in a better position to manage that relationship successfully.