VC Funded Companies Doing Well… But Will They Keep Doing So?

from the depends-on-how-you-look-at-it dept

While the VCs are whining about how much money they have, the companies they’ve put that money into are apparently helping to drive the economy forward. A new study has shown that venture backed companies have done much better during the downturn than non-venture backed companies, and actually added jobs during the period (well, what else were they going to do with all that VC money?). It’s interesting to compare this to a different study that came out today, however, saying that most entrepreneurs aren’t planning on hiring many new people over the next few years. You might be able to explain away the discrepancy by saying non-venture backed entrepreneurs are less likely to hire. That would make sense, since many non-VC backed entrepreneurial companies are small businesses that never need to hire many people. Still, the article seems to suggest they’re talking about venture backed companies (many of whom are complaining they can’t get cash out of VCs) in which case you could still explain away the difference by pointing out it’s not a matter of how many companies are adding employees, but how many employees are added in total. If you have one company that adds 10,000 employees and ninety-nine that have only one employee and go out of business, a bunch of jobs are added even if most startups aren’t involved.

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