Thursday, June 11, 2009

Perspective on Venture Industry from Kaufman Foundation

The Kaufman Foundation has published a report that shares their perspective on changes that ought to happen in the US venture market to keep it vibrant and offering sufficient risk adjusted returns to attract capital.

Though I don't agree with each point made by the author, it is well thought out and researched. Here's a snippet from the conclusion:

"It seems inevitable that venture capital must shrink considerably. While there is
no question that venture capital can facilitate some forms of high-growth
entrepreneurial firms, its poor returns make the asset class uncompetitive and at
risk of very large declines in capital commitments as investors flee this
under performing asset. While any estimate is subject to much uncertainty, it
seems reasonable—based on returns, GDP, and exits—to expect the pace of
investing to shrink by half in the coming years."

It's hard to argue with his perspective that the status quo needs change

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