Venture capitalists may not be exposed to toxic mortgage securities, but they, and the startups that they fund, will feel the pain, nonetheless.

A Yale University professor and a think tank analyst said the turmoil on Wall Street will extend the current deep freeze in the initial public offering market, curb merger and acquisition activity, and make it harder to raise money from limited partners.

The financial markets were in turmoil Monday as iconic investment bank Lehman Brothers said it was filing for bankruptcy protections and Bank of America bought troubled investment firm Merrill Lynch & Co. for $50 billion. Meanwhile, insurance giant American International Group was struggling to shore up its balance sheet. That turmoil was triggered by the firms’ exposure to billions of dollars in subprime mortgages whose value was difficult to determine.

Though VCs and their portfolio companies are far-removed from mortgage-backed securities, they will not be immune to the forces buffeting the financial markets, said Andrew Metrick, professor of finance at Yale University's School of Management.

"The main problem is the industry has been kicked in the face for the last seven years," he said. "The latest turmoil on Wall Street is not a direct threat, but the exit markets have been closed down already."

Since the beginning of 2001, roughly 300 venture-backed companies have staged IPOs, he said, compared to a healthier rate of 150 IPOs per year in the 1990s.

The climate for mergers and acquisitions—an alternative exit path for venture-backed companies—also is likely to take a hit.

"Everyone's just trying to scramble to survive," he said.

Ross DeVol, director, regional economics at the Milken Institute, an economic think tank based in Santa Monica, California, said VCs also will face a challenge in raising funds from the institutional investors and wealthy individuals who provide their capital.

"It's going to be more difficult to raise new funds in the next year," he said.

Startups also will be feeling the pinch as VCs keep a tight rein on the purse strings.

VC firms are "going to be much more diligent about where they invest," Mr. DeVol said. "I think it will make it harder for startups to get money."

Said professor Metrick: "It's too early to write the obit, but the patient is in a lot of trouble … It's a real crisis."