Back in 2004, there was suddenly a glut of public statements from venture capitalists complaining that there was too much money trying to invest in startups. Of course, what they really meant was that there was too much competition in their own space, and they no longer had the pick of the litter when it came to which startups to invest in. It looks like they're still worried about the competition, but now it's expanded to the hedge fund space. At a venture capital conference, a well known VC was heard complaining that too many American students go to work at hedge funds, since they pay so much. Of course, it's worth noting that many hedge funds these days are starting to fund startups -- moving into the space that used to be exclusively held by venture capital funds. Also, it's a bit amusing to see a VC complain about the pay at a hedge fund, as we don't hear about too many poor venture capitalists. He also complains that startups are getting too much money and spending it poorly -- the same arguments we've heard before. It certainly is true that companies can get distracted and make bad decisions with too much money. We've seen plenty of companies find value in staying lean to keep them focused. However, to hear that argument coming from a venture capitalist, it rings hollow. After all, these are the same venture capitalists who talk about how much "value" they offer above and beyond the money. If that's true, they shouldn't worry about there being too much money sloshing around startups, because they should be able to prove their worth in other ways. Also, if they feel that startups are getting too much money, and it's going to ruin them, there's a simple answer: don't invest in them, and let others waste their money.
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