Since my last post debunking the five alleged myths of entrepreneurs triggered more than a few comments and thoughtful reactions, I wanted to respond collectively to them.
First let’s start out with venture capital performance as an asset class. Over the last ten years, it has been terrible. On an absolute basis the returns are in the low single digits. My partner at New Atlantic Ventures, Todd Hixon recently weighed in on the shape of VC today here to explain what’s going on behind the scenes.
What caused this? VC managers got greedy in the 1999-2001 period as LPs threw more money at them. Fund sizes mushroomed at the same time that the IPO market dried up. They were caught with too much money in sub-par companies, and no way out but modest M&A for an exit. The math didn’t work. And, since on a dollar-weighted basis, the big funds drive the average returns, their performance drove the industry benchmarks. Just because the average VC return was terrible does not condemn every VC in the asset class.
To read the full, original article click on this link: peHUB » John Backus: Dispelling Entrepreneur and VC Myths
Author: John Backus
