Your traditional venture capital (VC) firms, Sevin Rosen in this case, are finding it hard to deal with success and expectation. In this article, Sevin Rosen general partner Steve Dow talks about how the expected returns for new venture funds “ain’t gonna happen” and that’s why they’ve decided against raising $300M for new investment in the fund Sevin 10.
When the VCs lose faith, we’re in trouble. One trend I observe is that VCs have grown increasingly risk averse. That’s a bad thing in a fundamentally risk-based business. You never want to take stupid or uninformed risks, but it’s risk you’re taking make no mistake about it. I’ve wondered when the industry would restructure, maybe this is the start. Once VCs stopping making deals because they’re risky, the start-up world as we know it ceases to exist.
One thing is for sure, if more VCs take this course, our economy as we know it is doomed. Our whole basis for competition revolves around risk-based innovation. Meanwhile, if you’re shopping a deal, you know at least one firm to cross off the list.
Ohio State’s 2006 record: 6-0 Next up: @Michigan State 10/14
Tune: Losing my Religion by R.E.M.
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