Capital rationing

Company fundraising held up surprisingly well over the first three years of the bear market. But there has been a significant falloff as this quarter closes, due in part to war fears and a sputtering economic rebound. Yet the aggregate numbers don't tell the whole story. Indeed, a few companies are receiving very sizeable funding rounds, suggesting that investors are engaged in very targeted capital rationing in both the public and private equity markets.

In the venture space, the behavior reflects investors' desire to find quality companies and to give them enough money - or "runway" in VC-speak - to take financing risk out of the equation. It also reflects the desire of many of the larger funds to put bigger boluses of money to work to justify the ever-lengthening due diligence being put into each deal...