Venture Capital Firms Merging

from the matri-money dept

It seems it's not only struggling tech companies that are looking to merge to stay in business. Now, many smaller venture capital firms are looking to merge in order to survive. The big name firms are fine, and have no interest in merging. The smaller firms, however, see it as a strategic option. Of course, it's not really clear what the benefit is (except maybe having access to more capital). If you merge two firms, you just get one bigger firm. If the two smaller firms couldn't make good investments originally, it's not likely that a bigger one is going to have any better luck.
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  • identicon
    Genki, 17 Jul 2002 @ 5:52pm

    Twice as many lottery tickets

    The impetus for small VC firms merging may come from the "twice as many lottery tickets" mentality i.e. by merging each of the firms doubles its chances of participating in a "success" event such as an IPO - even though they will only make a half-windfall rather than a windfall if it happens.

    Given the current investment market, it's probably moot - but it's certainly one possible explanation!

    link to this | view in chronology ]


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