The financial crisis has caused investment in venture capital funds to dry up since the collapse of Lehman Brothers in September. This funding gap leaves many VC-backed technology companies facing a cash crunch this year.
“Starved of capital, companies will go to the wall or they will be forced to cut back too far, reducing jobs and losing competitiveness,” said Richard Anton, partner at Amadeus Capital, one of the UK's biggest venture capital investors.
The financial and economic downturn have made life more difficult for venture capitalists across the world, with the possible exception of China. But VC bosses say the UK suffers from a dearth of big investors with deep pockets, as exists in the US.