You Won't Get It Back???
The Boston Globe ran a great list of ten issues with the venture capital business earlier this week.
I generally agree with all of these issues at some level and have been outspoken on this blog about a few of them.
But I take issue with Paul Ferri’s quote in the article. He says, “”Let me give you some advice. Do not put money into this industry. You won’t get it back.”
What is he talking about? I don’t know of anyone who is active in the venture business right now who feels that way. Our portfolio is producing great returns on the money we invested post-2000 and I am fairly certain most of my colleagues in the business are experiencing the same results.
I think its absolutely true that if you back a VC firm that is trying to find the next Apollo, Cascade, Stratus, Apple, Sycamore, and Tivoli (the deals the Globe listed as representative of Paul’s big successes), you may not get it back. The business is changing. But most firms can adapt and are in fact adapting. Less core tech is being funded. More applied tech is getting money. Firms are doing recaps, rollups, spinouts, etc.
The venture business is full of smart people who understand how to sensibly invest capital. And the technology business is full of smart entrepreneurs who will find new ways to make money. I am betting the technology venture business will be a money maker for many years to come.