It should be no surprise that the current financial crisis is negatively impacting VC financing. Limited partners are having problems making capital calls, and IPOs are no longer an option for an exit. Cooley Godward Kronish LLP recently released its report on venture capital financing terms for 2008. As expected, valuations significantly deteriorated in Q4. How does the new financing environment impact life sciences investments? According to VentureSource, investment in U.S. health care companies decreased by 42% in Q4 compared to the same quarter in 2007. An article in the February edition of Nature Biotechnology summarizes some of the negative consequences, especially for early-stage health care startups. As VCs become more risk-averse and as valuations come down, later-stage investments will probably be more favored, and terms will be more onerous for the entrepreneurs.