Private Equity is not the answer

Many startups have turned to private equity firms in the past few years for next-round fundiing, but that option doesn't look to be available in the current credit crunch.

According to the Boston Consulting Group and the University of Navarra business school in Spain, half of all companies backed by private equity are expected to default on the debt and many buyout firms will be closing their doors soon.

That opens the opportunity for private-public partnerships between VCs and foreign governments to take up the slack for driving innovation and bringing the tech economy back.