How Open Should VCs Be?

from the oh,-that dept

There’s been a longstanding debate concerning how open public organizations need to be concerning the returns they get on funds they invest in venture capital. The VCs are afraid that if the info is public, it puts them at a disadvantage. However, public organizations that are investing public money should be required to reveal what’s happening with that money. The debate is on again as some are demanding wider disclosure. While disclosure is generally a good thing, there’s a clear risk that VC returns will be looked at in the same way that company quarterly reports are — which is unfair and inaccurate. Part of the problem might simply be the way VCs measure the performance of their own funds, basically making up the valuations of their investments if nothing has happened to let the market price those investments. The reality is that a VC investment is worthless until the VC cashes out — so coming up with interim valuations seems sort of pointless.

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