The article stated: "Much of the soul searching along Sand Hill Road in Menlo Park, where many of the venture capitalists have offices, is leading to the same conclusion: venture capital needs to go back to basics. The biggest names in the industry are concerned about low returns and are blaming several factors: funds that have grown too large, the M.B.A.’s that have invaded the industry and older partners who have lost touch with what is new in technology."
The article continues: "“I personally believe and I think the evidence proves that the venture industry has gotten too big, the funds have gotten too big,” said Alan Patricof, an investor for 40 years who backed America Online and Apple, at a recent venture investing conference in San Francisco. “Our biggest challenge today for venture capital is to think smaller.”"
Vinculum thinks that the current economic crisis has forced the VC industry on a crash diet, which in many ways are beneficial. The wheat is separated from the chaff, and funds that went around as trend-followers with no unique insights or operational value-add to start-ups are being killed.
What does this mean for start-ups? Finding funding is going to get tougher! But you know this already. What you should take away is the sense that the VC industry is going to think longer-term and putting in more effort to add more value to their portfolio companies. This means more focused VCs, seeing if they can make a strongman (as opposed to a fat cow) out of you. The way of simply pumping money into "the next best thing" and waiting for a 100X exit is no more...
No comments:
Post a Comment