Jun 29 2009

Venture capital is dead! Long live venture capital!

Dan Primack sited a study on PE Hub today that found that over 50% of VC professionals believe that the VC industry is “broken”.  My response:


Seriously. It seems like the venture industry these days spends more time lamenting its future than actually working towards a future that’s different.  And they couldn’t be more short term in their perspective.  VC sentiment has started to become like consumer sentiment – something that moves on a monthly basis. Are we forgetting that our business is about spotting long term trends and funding business cycles that are measured in years, not months?!? 

It’s possible I’m simply in the wrong demographic (almost 85% of the respondents were east- or west-coast VCs), the wrong fund stage (we raised capital in late 2007 and as a result are still in our active investment phase), have the wrong fears (in the “very worried” category “Exit Markets” was a 2x favorite over all other choices – but good companies continue to find liquidity), or am simply in the wrong mindset (I think now is a great time to start a business and an equally great time to be an early stage investor). 

My partner Jason has a thoughtful response to the study (as you might imagine he shares my optimistic view) in which he points out a few key reasons why now is a great time to be an investor (you can read the full article here):

  • Its never been cheaper to start a business
  • There are a ton of entrepreneurs around working on interesting projects
  • Many of these entrepreneurs have been around the block a few times
  • The venture markets aren’t dependent on the credit markets, etc.
  • What we thought/hoped would happen 10 years ago has – the world of technology is larger and more lucrative than we even imagined

I’m done talking/listening about how the venture model is broken. If that’s how you feel and you’re in venture, perhaps you should find a new job.