Comments on: A Time for Change in Venture Capital

By: manu

manu — Sat, 21 Feb 2009 03:33:26 +0000

@Alan: Thanks for your comments. I agree 100%. The only reason I didn't mention fund sizes in this post is because I have written about precisely that in the previous post: The Venture Spiral. A more recent post: Thoughts on “Another View: V.C. Investing Not Dead, Just Different” also touches on this topic. I strongly believe that smaller fund sizes will be essential to getting early stage venture capital investing restarted. However, not all the major established funds are going to cut their fund sizes to be a fraction of what they were. Instead, this will happen by new funds emerging to fill the gap. The catch is that since venture moves at such a slow pace (to raise capital, to establish a track record, to establish a reputation and a brand) the process will take some time. It has already started, with some great funds like First Round Capital, Maples Investments and Softech VC for example.

By: Alan

Alan — Fri, 20 Feb 2009 18:13:03 +0000

This is a very well written, assessment of the VC industry as a whole, but I think there is one factor you are not emphasizing enough: Fund Size – A large fund’s GP’s interests are far from aligned with the interests of the LP’s. Take your typical, run of the mill $500M fund that charges the industry standard annual 2% management fee. The GPs are guaranteed a $10M per year management fee to use at their discretion. Multiply that over a handful of funds and you can see why large fund’s GPs don’t necessarily have the LP’s interests in mind.

A change MUST come to this industry or we’re going to see a very nasty fall out once the current funds expire.

By: K9 Ventures » Blog Archive » 70% drop in venture fundraising?

K9 Ventures » Blog Archive » 70% drop in venture fundraising? — Mon, 19 Jan 2009 21:11:25 +0000

[...] my previous post, A Time for Change in Venture Capital, I’d guess-timated that a 50% reduction in the total money going into venture capital is not [...]

By: DevelopmentCorporate » Blog Archive » VC & PE Doom & Glom Links 2009 Part Deux

Thu, 08 Jan 2009 12:52:56 +0000

[...] K9 Ventures » Blog Archive » A Time for Change in Venture Capital – [...]

By: K9 Ventures » Blog Archive » Thoughts about “The Coming Venture Capital Boom”

Sun, 04 Jan 2009 00:11:03 +0000

[...] and before venture firms can benefit from this upcoming boom, there need to be some changes. The current environment provides enough momentum and incentive for a change in the venture capital industry. It is my [...]

By: Ray Robidoux

Ray Robidoux — Sun, 28 Dec 2008 19:56:56 +0000

I totally agree with your perspective. I think that the conditions you describe make it an opportune time for early stage VCs and Angels to carefully evaluate and select investment opportunities, that don’t require the “homerun” type of returns that larger VCs need and look for due to the size of their funds, management fees, etc.

By: K9 Ventures » Blog Archive » The Venture Boutique

K9 Ventures » Blog Archive » The Venture Boutique — Mon, 15 Dec 2008 05:34:38 +0000

[...] About « A Time for Change in Venture Capital [...]

By: eleith

eleith — Fri, 12 Dec 2008 19:26:15 +0000

good post, but that’s not why i’m commenting.

i just wanted to say, “i love this color theme”.

By: Monica Enand

Monica Enand — Wed, 10 Dec 2008 17:45:27 +0000

Great post Manu. It is really thought provoking.