Blog Roundup: Discussion of TechCrunch post on the decline in VC returns

TechCrunch Blog Post: Ten-Year Venture Capital Returns Continue To Slide

(Source: Cambridge Associates LLC via TechCrunch; The crude annotations are mine.)

Ouch.

There are lots of problems with this 8.4% 10-year rolling average return for venture capitalists in the US.

The big one, of course, is that when VC returns head into the 8% range, institutional investors who might otherwise plow an obligatory 1% into VC firms to cover their “alternative” category, start looking for less risky investments with similar return profiles.

And if those institutional investors start to go away, you end up with smaller VC funds and a big gap develops in the middle of your investment cycle, as it did  from 2001 to 2003 – between the seed investors involved in early rounds and the larger, later-stage VCs, private equity funds and strategic industry investors who might participate in later rounds.

Of course, this should be a temporary problem: This is a rolling average and low returns can’t last for much longer, can they?

Or can they? (more…)

Top 10 Unspoken Investor Questions Redux: Video

Here is a quick 15 minute video presentation of the Top 10 Unspoken Investor Questions presentation I made to the OpenBeta PitchCamp event: