At least that is what you'd think was the case for most start-ups. The past couple of months I've been seeing quite an upswing in posts bashing VC's. Not only are the VC's themselves being abused, so is their performance. Fortunately, this reminds me of 2000. After the Internet bubble burst, VC's were the bad guys. They were the ones caught up in irrational exuberance. Their business model was broken and they were all finished.
Well, fast forward 9 years and let's take a look at what we have. The industry has significantly consolidated. Less new funds are being started and lots of the ones out there are running on fumes. Venture partnerships are structured over ten year periods hence the next couple of years are going to be brutal, especially for funds started in 2000 or later. Nevertheless, we are returning to normal.
The upswing in the number of funds was a one-time event back in the late 90's. There were so many funds out there in 2000 that it wasn't a sustainable level. Hence, the market is correcting and we are coming back to a normal number of funds in the market. You'll have far less funds in Europe when compared to the US but both geographies are seeing a significant decrease.
Back to my original thought. If your VC is still around, has 10+ years of track record and has raised multiple funds, they'll probably be around for a while longer. Yes, the industry is changing but players have established themselves in their respective markets. Those who survive do so because they deliver returns. Are there assholes out there who manage to somehow continue to survive? Yes, there sure are, as is the case in every industry. Is it to be believed that the majority of VC's out there though are crap and not worth taking money from? Well, that's up to you to decide if you're raising money. As I've written before, no one forces you to raise money from VC's. Should you believe all the bad press on venture capital? Well, take it with a grain of salt. Educate yourself and don't depend too much on the people whining online about how bad things have become. The best funds are still out there banging out good deals.
