Reports of venture capital’s demise are greatly exaggerated. Not a day goes by without a commentator reading the VC industry its last rites. And many of the gloomiest prognostications come from those inside the industry. A recent survey found that 53% of VC respondents felt the industry was broken.
It’s too easy and lazy (and self-serving for some) to claim the VC model as broken. Nineties nostalgia recalls VC as an investment strategy played on Lake Wobegon, where the sun always shined, all portfolio companies were above average, prices always moved higher and everyone came away a winner.
This was a blip in a cottage industry still in its formative years.
I see the VC “model” best defined by its primary activity (principal investments in early-stage, unproven companies with high-potential) and unique structure (long-term investment partnerships with incentives to share the risk and reward). Simply: risk capital, pooled.
Original Article: peHUB » Venture Capital: Who (Not What) Is Broken
Author: Peter Hebert
