The received wisdom, magnified in the years following the dot-com bust, is that the universe of top-performing venture capital firms is very small. Fewer than 30 firms perhaps compose the privileged lot. As for the rest -- 840 as of 2011 -- limited partners have largely been disappointed with general partners' poor to middling returns. Yet investors continue to pour money into their coffers, despite the fees and investment risks.
The reasons behind the concentration of elite VCs are more readily understood than the reasons why institutional investors persist in backing mediocre performers. In the self-perpetuating ecosystem of early-stage betting, firms like Sequoia Capital get first dibs on the best deals that they source from successful entrepreneurs who seed other ideas that feed into the VC firms' network.
To read the full, original article click on this link: Venture funds: Is the investor model broken? - The Deal Pipeline (SAMPLE CONTENT: NEED AN ID?)
