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VC: "Wait Until Next Year"

If you want to get money for your startup, you might as well stop now, enjoy -- if you can -- the Thanksgiving Day holiday (there must be something to be thankful for),  Christmas or Hanukkah and then just wait for the bell to ring in the New Year before trying to get any funding.

If you want to get money for your startup, you might as well stop now, enjoy -- if you can -- the Thanksgiving Day holiday (there must be something to be thankful for),  Christmas or Hanukkah and then just wait for the bell to ring in the New Year before trying to get any funding.

The volatility of the stock market, the uncertainties of the credit crisis and the still-unfolding understanding of the impacts of the economic downturn will make meetings with venture capitalists are not likely to bear gold for the rest of the year.

Money, already, has gone on vacation, in the opinion of one venture capitalist who met with Between The Lines today. He wouldn't talk on the record, since the "wait until next year" credo is not necessarily shared by his partners. And he and his partners have funded hundreds of tech firms over the years and have more than $1.5 billion under management today.

The pace of a venture capitalist, after all, is not fast, even in normal or "good" times. A partner may make only one investment each year. This venture capitalist has not made an investment in 17 months -- and hasn't been penalized for it.

"People are taking the rest of the year off,'' he says, to see how the volatility in financial markets plays out, who wins the presidency and if the economy shows any resilience.

Moreover, individual investors are holding onto their wallets, he says, because they no longer know if they are worth $100 million, $70 million or $130 million. They have no solid vision of what they can safely spare to invest, right now.

After all, the worth of their portfolios can change dramatically, in a day or even an hour. The Dow Jones Industrial Average at noon today was slightly up, about 7 points, at 10 after noon. So it hasn't given back its 889-point gain of yesterday. Here's the latest.

But it almost doesn't matter any more. All the action is dictated by emotion at the end of day. Monday, a 176-point gain at 2 p.m. was wiped out. In the last half hour, the Dow plunged to a loss of 203 points. Yesterday, a similar gain at the same hour led to the almost-historic gain -- which was only bested by one other day in Dow history. Two weeks ago.

So, if you're looking for money, he says, don't take too many meetings. They likely won't produce any follow-up. They may even be canceled.

You can spend your time boning up on Sequoia's 56 slides of doom. Or by reading the Forrester and Mayfield opinions that the fallow period this time won't be as bad the tech bust at the start of this decade -- and that you can innovate your way out of it.

And if you already have money, count it. Closely.

This VC says you'll need to have enough on hand to handle a full 12 months of burn in 2009. And then another five or six in 2010 to raise a replacement round of funding.