Is the Venture Capital Business Broken?
This past summer we surveyed over 1,000 venture capitalists, and asked them a simple yes or no question: “Is the Venture Capital Business Broken?" Over 53% of the respondents said “yes." This triggered a lot of conversation in the blogosphere and in the VC community. It got me thinking about what exactly is going on and made me want to do a deeper dive. As a result, late in the fourth quarter I reached out to 50 general partners of venture funds across the country in Silicon Valley, Austin, Dallas, Tysons Corner, New York and Boston to gauge their sentiments about the state of the venture business. Not surprisingly, a wide-range of insights and comments resulted from those conversations. I started those dicussions by asking: “How does the venture business look on January 1, 2010, when the industry can no longer drag around the 1999 returns in a trailing 10 year average?” The best response I received was that on that date that the industry would go to a 12-year trailing average!
