
A Scary Line Has Been Crossed For VCs - transburgh
http://www.techcrunch.com/2008/11/12/a-scary-line-has-been-crossed-for-vcs/
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pwk
In a down market, investors should be buying and not selling. In the context
of VCs, it's probably a good time to fund ventures because the equity they get
for their cash will be higher, and it's probably a bad time to exit because
the cash they get for their equity will be lower. So, maybe VCs are simply
being solid, patient investors.

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jrockway
I don't really think it's fair to single out 2008 as the start of a trend.
Hell, money market accounts lost money this year. That is very unusual, and
the economy is not doing so well right now. Why would startups be magically
immune?

Also, if you integrate the curves to get total funds raised and total value
created, this doesn't really look bad.

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mynameishere
Money market funds in the aggregate have by no means lost money this year.

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timr
I think his point was that this has been a year of exceptional events. The
fact that even one fund broke the buck is big news; under-performing VC funds
are a footnote in comparison.

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hooande
This will work itself out. If you have an idea for a product that profitably
solves a problem for hair on fire customers, you'll still be able to get
money. Some of the so-so ideas might not get the amount of time and funding
they were used to.

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condor
I'd like to see a graph showing a running total of venture capital invested
versus a running total of net income earned by VC investments.

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mattmaroon
They're still ahead of finance and airlines.

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alecco
Finance and airlines get free money from government, VCs not.

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ojbyrne
Southwest proves you wrong on "airlines." Still making profits.

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mattmaroon
Some VCs make profits too, it was referring to the industry as a whole.
Airlines as a whole don't make money.

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thinkcomp
The graph is indeed scary looking, and it's consistent with both Judith
Estrin's book "Bridging the Innovation Gap," and an essay I wrote over the
summer:

[http://www.huffingtonpost.com/aaron-greenspan/all-is-not-
wel...](http://www.huffingtonpost.com/aaron-greenspan/all-is-not-well-in-
silico_b_113226.html)

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time_management
What's supposed to replace VC, exactly? No one likes having to deal with "the
money problem", and there are obvious inefficiencies and flaws in the current
VC system, but I don't see any obvious solutions or how anything better could
be developed at scale.

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ksvs
Angels.

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time_management
This is why I qualified my post with "at scale". I don't think there are
enough qualified, technologically knowledgeable angel investors out there to
cover a significant fraction of the startups that need funding. Keep in mind,
also, that although the economy will recover, the glacial retreat of the 20th-
century big-box corporations is a rather permanent state of affairs, which
means that there will be a lot more people trying to start companies, while
the number of wealthy individuals/angels will not increase at nearly the same
rate.

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crabapple
boo-fucking-hoo. a down market hurts everyone. well maybe they should use this
lull to re-educate themselves for the future. guess what folks, sandhill road
will be as dead as wall street unless you try expanding past websites. let yc
fund this low-iq crap. time to bone up on all that chemistry you skipped in
high school, you'll need it if you are going to evaluate greentech, nuclear,
etc

