In Q2 of 2011, venture firms began to scale back their investment, particularly in the technology sector, due to economic fears. With buzz swirling regarding a tech bubble, similar to the boom and bust of the late 1990's, as well as continued economic uncertainty, investment dipped 5% in the second quarter with a 2% decline in deals from the same time last year.
Barry Kramer, who represents tech start-ups, stated that a challenging fund-raising environment for VC firms may also be to blame for a dip in investments.
The National Venture Capital Association says that funds receiving investments from institutional investors dropped 23% last quarter, highlighting the increasing difficulty for venture firms to find the necessary funding for start-ups.
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