

Venture Capital Returns Dip Below Zero - brentb
http://bits.blogs.nytimes.com/2009/02/02/venture-capital-returns-dip-below-zero/

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medearis
Though an interesting data point in terms of specific numbers, I also am not
very surprised that VCs are losing money at the moment. What I did find
somewhat refreshing was the fairly limited discussion of how this is an
indicator that venture capital is dead and Silicon Valley innovation has come
to a grinding fault. I think the days of needing millions of dollars to build
a web app might be over. I think its possible to start a company with less
capital now. But... there are still plenty of capital-intensive and innovative
companies for VCs to invest in for the big payoff.

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gscott
I noticed from the last 'downturn' (so to speak) that the VC backed companies
that failed did so in a way that opened a new market. A few years later
companies moved into that same space and was able to succeed because the
companies that failed opened people up to the idea but were just too far ahead
of the public's willingness to adopt.

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drcode
just when my new startup is starting to look for capital :-)

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lionhearted
" _Short-term returns_ are so low because of there were fewer ways to exit the
investments. With the public markets in turmoil, venture investors have simply
been unable to take their portfolio companies public, and acquisitions last
year were down 28 percent from 2007.

Poor returns have led some investors to _question whether venture capital is
still a profitable model_."

Emphasis mine. Looks like instead of getting acquired, VC-funded companies
will have to just do it the old fashioned way and make some profit. The good
news is that cashflow and profits are awesome, and owning a portfolio of
companies generating positive returns for investors and growing is not a bad
thing. Positive profits combined with growth typically sells well, though it
does mess with the time horizon.

I reckon it'll mean less investors looking into IPO/acquisition for a huge
score on a small percent of their companies, and more investors looking for
solid, rapidly profitable and clearly useful companies.

