The venture capital business is very cyclical, like any other market it's neither possible, wise, or prudent to attempt to time these cycles. Prudent VCs manage a practicable amount of capital and deploy it, consistently, year in and year out no matter what part of the market cycle they are in. In so doing, the valuations VCs pay for their investments average themselves out, thus allowing them to INVEST IN THE UNDERLYING VALUE CREATION PROCESS and not in the market per se. In this article, we address how VCs have approached economic downturns in the past as well as discuss what we anticipate from them in the current market environment.
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