Tech sector braces for hurt as venture capital investing hits brakes

As written by Urvaksh Karkaria in the Atlanta Business Chronicle:

For Atlanta’s tech industry, a fundraising winter may be coming. In what could be a tell-tale sign of a broader retrenchment, the venture capital industry appears to have applied the funding brakes in the second quarter — in Georgia and nationally. Georgia companies drew $117.24 million in the quarter, down 43 percent from a year earlier. Venture funding in Georgia year-to-date is half of what it was in the first six months of 2015.

If companies try to grow “super fast,” they can be capital-inefficient, said Mark Buffington, managing director at BIP Capital. “We’ve assessed our entire portfolio in the past few months and we’ve gone to folks and told them to tighten their belts in areas and to make sure they are ready for any kind of future headwinds.”

In addition to capital-supply constraints, Buffington points to macro-economic headwinds. “We are long in the tooth in an economic recovery, we’ve got a presidential election cycle coming up,” he said. “That tends to affect growth opportunities and the way people spend money.”

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