Check Your VC's Pulse Ask your VC three questions to gauge its level of involvement.

With the U.S. economy bouncing around chaotically, VC-backed companies are in a unique position: Until they become cash-flow positive, they're dependent on the support of their investors for additional financing.

I recently heard some remarkable rumors and innuendos about how software and internet investing was finished as the VC firms stopped investing. I expect these assertions were triggered by the now infamous "RIP: Good Times" presentation from Sequoia Capital in October. A number of people I've talked to concluded that a bunch of VC firms were going to simply go out of business.

I heard this type of talk a mere seven years ago. After the dotcom bubble popped, there were endless predictions of doom for the software/internet industry and the venture capitalists that supported it. The broader predictions of VC extinction didn't happen, and my firm made some of its best investments between 2000 and 2004.