VC Firm's Cutbacks May Set Off Another Round

from the but-of-course dept

No big surprise here. As predicted, VC firms are already starting off the year by returning some money to their increasingly annoyed limited partners. Those investors are annoyed that they’ve given billions to these VC firms, who have simply sat on the money, while earning their management fees. The latest to give back money is Mohr, Davidow, who had originally raised an $850 million fund. Last year, however, they gave back $200 million to make it a $650 million fund. That was still too much, though, as they’ve handed back another $200 million, to bring the grand total down to $450 million. I stand by my assertion that these VCs are being stupid. Right now is a great time to invest in companies. Valuations are low, and they can seed a company now who has plenty of time to grow a real business – and be in great shape the next time an IPO window opens up down the road. Instead, the next time IPOs are fashionable again, VCs won’t have any serious companies that are really ready to go public, and they’ll start pushing out crap again.

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Comments on “VC Firm's Cutbacks May Set Off Another Round”

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1 Comment
Gene Hoffman (user link) says:

So True

The mark of a good investor is investing when its out of favor. Clearly very few VCs are good investors and LPs should take note.

People are cheap, space is cheap, profits at likely customers are under pressure. If you have a company that has a product that is going to take development time or will address a profitability pain point, NOW is the time to finance them…

So funny how much of a flock of sheep the VC community is. Its too bad there is no easy way to short their returns.

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