VC: Rumors of its demise are probably premature


Not that I'm an expert or anything...


In the last few days there have been several articles about the problems in High Tech Venture Capital. One particularly interesting one was in the New York Times on Sunday talked about the exodus of recently minted venture capitalists from the business:


"We can't really have people learning on the job anymore," Mr. Kramlich said. Two-thirds of the partners who were at N.E.A. in 1997 are no longer at the firm, he said, and then cited an internal study that went a long way in explaining why: the surviving third accounted for 85 percent of the firm's profit." (from New York Times)


Another one, from Technology Review, a first hand report from Howard Anderson, about why he is leaving the business:


"Good-bye! We venture capitalists like to think of ourselves as giants striding across the technology landscape, showering money on terrific young entrepreneurs, adding value, creating jobs, nurturing real companies. We are financial samurai. But I am giving it up. Why? [...] First, Technology Supply is bloated. [...] Second, there's a good reason why technology spending is stagnant. [...] Third, the financial markets for technology companies is no longer exuberantly stagnant. [...] Fourth, these changes in Venture Capital are structural, not cyclical."(From Technology Review.)


For me, I'll say, I consider these bullish signals. The fact that there is public hand-wringing about the "VC Model" makes me predict that the next round of Venture funds will do better than the last few. But what do I know?


I was wondering if any of my VC friends would care to respond?

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Posted on May 25, 2005 and filed under Life, Technology.