“It was the best of times, it was the worst of times…”
For our members, and to keep it short and sweet (like the author): let us address the latter first, then the former. Although one should be constantly reviewing portfolio companies to determine adequate reserves, this is a time of particular urgency given the uncertainties in the capital markets. Whereas we may have expected/hoped that third parties (particularly venture funds) would be interested in investing in our companies over the near term, these third parties may husband their cash for their own portfolio companies, and therefore they are not be looking for new, outside investments. That means we should similarly be adjusting our reserves so that we will be prepared to support our companies.
This also addresses the former part of the quote. If firms are focusing on their own portfolio companies, for those who have liquidity, this is the time to invest. There may (the operative word) be less competition and, perhaps (another operative word), be some rationality to valuations.