Venture capitalists scale back

We've noted that the venture capital industry has arrived at a pivotal moment and the credit crunch has made exits much harder, even as its traditional business model shows signs of strain. As if to underscore the point, the AP reports that VC money flowing to companies fell to $7.1 billion, down 10 percent from a year ago. That marked the first quarterly decline since the final three months of 2005, and the largest decrease since the spring of 2003. The recession will no doubt take a toll. The AP notes that Sequoia Capital and Benchmark Capital have already advised portfolio companies to "redraw their business plans" for next year and slash costs so they have a "bigger cash cushion to weather what is expected to be the worst recession in a quarter century." It's all about survival now.

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