Financial News Headlines

The House of Representatives on Tuesday passed a $26 billion bill that Democrats say will save the jobs of over 300,000 school teachers, municipal workers and first responders such as police officers and firefighters. The measure’s passage hands President Barack Obama a key election-year victory as he seeks to convince skeptical voters that his economic recovery plan is working.

The bill passed the Democratic-controlled House by an almost entirely party-line vote of 247 to 161.

“Today we will create or save 300,000 jobs and not just any jobs, but jobs that are essential to our country,” House Speaker Nancy Pelosi (D-Calif.) said during a press conference after the vote.

In a highly unusual move, Pelosi recalled House lawmakers Tuesday for an emergency vote on the bill just as they were settling into the six-week summer recess. Read more…

Since the Great Recession began, venture capitalists and angel groups have been making smaller investments in their portfolio companies.

From 2007 through the first quarter of 2010, the size of the average (mean) investment round fell by 31 percent, and the size of the typical (median) investment round declined by 39 percent in real terms, according to analysis of data from Dow Jones Venture Source.

Below is a chart which shows the trend, created from the Dow Jones data.  The numbers are normalized with the Bureau of Labor Statistics inflation calculator to take into account the effect of inflation.  The chart shows that, after small increases from 2005 to 2007, the sizes of the average and typical investment round have declined sharply during the Great Recession.

Moreover, this decrease has come despite an increase in the share of later round investments (which tend to be larger).

The Size of Investment Rounds, 2005-2010:

Source: Created from data from Dow Jones Venture Source.

Why are venture capitalists putting less money into companies now than before the Great Recession began?  Are VCs are taking smaller stakes in the companies in which they invest, or are investors putting in less money for the same share of ownership, driving down valuations?

There’s no way to know from the publicly available Venture Source data because information on ownership stakes isn’t reported.  But I suspect that valuations of high growth companies are coming down.

That’s what a Fall 2009 report from TrueBridge Capital Partners suggests.  The authors explain that median seed and start-up stage valuations declined dramatically during the recession, saying “Median early stage pre-money valuations reached their second lowest point of the past 15 years in the fourth quarter of 2008, the last time period for which we have data available …. Anecdotally, downwar

Read more…

A strong credit score is one of the most important things you can have in tough economic times. Credit scores are especially important when applying for a mortgage or car loan. With funds getting tighter and people cutting back, a strong credit score shows you are fiscally responsible and serious about your finances.

Mortgage lenders and banks are not the only ones who look at your credit score. Insurance companies look at it to determine premiums or deny coverage.

Read more…

The National Football League may not be recession proof, but it has done fairly well during the economic downturn. Nonetheless, as training camps get underway, owners and players are worried about being blind sided by a possible work stoppage in 2011.

At issue is the owners’ desire to control skyrocketing player salaries, particularly the huge signing bonuses awarded to rookies, many of whom ultimately don’t pan out.

As NBC Sports noted last year: “Players now receive 59.5% of all money generated by the league. The salary cap for each team is now at $127 million, up from $85.5 million in 2006. Read more…

Treasury and mortgage prices are slightly higher this morning as the weekly jobless claims report today was worse than expected. Investors will be speculating on tomorrow’s employment report, which may encourage the Fed to provide more economic stimulus if the numbers are dissapointing.