If you have been reading this blog over the past couple of weeks you might have picked up that I’m a big admirer of Steve Blank and his thinking about how to build startups.  Yesterday he wrote a blog post entitled Welcome to the Lost Decade (for Entrepreneurs, IPO’s and VC’s) which sets out the changes to the environment in which we are all working and explains how tough life is going to be for the startup ecosystem as a result.  As I said I’m a big fan of Blank, but I think he over states his case this time.  In the rest of this post I will pick out the salient points from Blank’s piece and then finish by saying why I think the situation isn’t as bad as he makes out.

Venture capitalists in the United States widely expect their industry to contract while those in emerging markets, including China, India and Brazil, expect to see their ecosystem expand over the next five years, according to the 2010 Global Venture Capital Survey by Deloitte and the National Venture Capital Association. According to the survey results, more than 90 percent of U.S. survey respondents expect the number of venture firms to decrease between now and 2015, while a majority of venture capitalists in China, India and Brazil anticipate adding more venture firms in their country during the same time frame. Venture capitalists in Europe and Canada also expect an industry contraction in their respective countries though to a lesser extent than in the U.S.

Thirty eight US venture capital funds raised $1.9 billion in the  second quarter of 2010, according to Thomson Reuters and the National Venture Capital Association (NVCA).   This level marks a 49% decline, by dollar commitments, compared to the first quarter of 2010, which saw 38 funds raise $3.7 billion during the period. This quarter represents the lowest by dollar commitments since the third quarter of 2003.