A lucid analysis of the predicament facing VCs and their investments as a result of the liquidity crisis, from Techdirt/Mike Masnick. Included within is this:
Usually startups go through multiple rounds of funding, which the VC firm bakes into its calculations when doing the initial funding. That initial firm may not lead later rounds (in fact that’s rare), but it usually will participate, and now that may be more difficult. That could cause some VCs to push their portfolio companies to sell off or close up shop much faster than they normally would.
The statement assumes there will be buyers around, and while that may be I suspect the spread between arms-length exit price (if there is such a thing) and liquidation price is going to close very very quickly now.