Yesterday, I posted on a VentureBeat piece covering the correlation between exit market conditions and venture capital company-building behaviour and philosophy; or lack thereof. The piece called for a back-to basics approach to venture capital, where investors are focused true partnering with entrepreneurs to build fundamental value over a traditional investment horizon (5-7 years).

In today’s post, I wanted to tackle the flip side of this issue; the notion that exit markets and general public equity market conditions also have an impact on venture investor investing behaviour. In my opinion, there are three things required for a healthful level of new venture investment activity; liquidity, valuation stability and convergence of expectations.