Is Venture Capital Over?

from the yeah,-right dept

A well known venture capitalist is apparently claiming that the age of the VC is over, and is getting out of the business. The specifics of his claim are that VCs won’t be able to earn the same sorts of returns they did in the 90s, which he chalks up to “systemic change.” If anything, it sounds like he’s channeling Nicholas Carr, who believes the tech industry is becoming commoditized and boring (misunderstanding that things first get interesting when stuff gets commoditized). Of course, the silly thing is that he seems to be comparing today’s VC returns to what you could get in the 90s. He claims that “the eye-popping returns that make venture capital famous are history.” Of course, the easy response to that is that perhaps most of the “eye-popping returns” were the aberration in the first place, built on the bubble of hype-cycles past. That means there’s still plenty of opportunity in real innovation — and even without that, you can bet that there will be more hype cycles and bubbles. History practically guarantees it. While bubbles aren’t good for everyone, good VCs generally are able to make out quite well (since they bail out early enough) — and we’ve already explained why bubbles eventually are good for most people. While it’s bad for those who get sucked up in the hype, it does accelerate innovation by allowing a lot of companies to quickly test (and discard!) many different ideas.

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