from Hacker News

Fred Wilson says venture capital funds have gotten too big

by kevinpacheco on 8/23/12, 10:39 AM with 27 comments

• by brackin on 8/23/12, 11:33 AM

  "Lately VCs haven't come close to generating the returns on their investments that made them stars in the 1990s."

  That's because it was in the height of the internet bubble. Companies have to work harder and show real revenue. People may not believe it but the recent IPO's have shown this. Tech companies have to show revenue and progress other than traffic .

  Companies are springing up that do more than social networking. In the 90's there were many of these crazy ideas but there were no consumers to use them so the valuations were out of whack. I think we're going to see some more ambitious companies coming out. Simple, Square and Uber are the first step.

• by mathattack on 8/24/12, 2:44 AM

  Let the market decide this. My impression is that the average VC firm doesn't deserve the carry plus expenses. The great ones do. (And it's strange they all still charge the same variant of 2/20)

  So what will the market decide? I have no idea.

  But if the ex-Netscape/LoudCloud types can return good money to their investors, they will be trusted with more money. And this should continue. If they don't, the funding will dry up soon enough. The invisible hand will guide this, so there is no need to intervene. If 200 funds investing X dollars is better than 20 investing 10x, the returns will show it. If the status quo is somehow a disservice to innovation, then it becomes a national R&D funding issue rather than a VC issue.

• by stitchy on 8/23/12, 1:28 PM

  I'm curious why Fred Wilson would proclaim to the world that investing in his VC firm isn't going to give you the return that you're looking for these days. Is there a short term gain for him that I'm not seeing? Or is Wilson genuinely trying to change an industries path with a few words of wisdom? I'm not suggesting that his advice is bad. It seems to make sense to me.

• by lifeisstillgood on 8/23/12, 11:43 AM

  VCs are not too big, they are (apparently) investing in the wrong companies.

  If humanity overall wins out, the next 20-30 years will see industries we can barely imagine grow to maturity. From electric driver-less cars, to new forms of power generation (even fusion), new building methods, new education, and vast mega-cities will spring out of nowhere.

  In the West, in the rest of the world, we will see vast demand for things that are barely off the drawing board. And they will need support industries, innovating widgets and helpful doo-hickies.

  All of which will take specialised knowledge, innovation and investment. Just what VCs are supposed to do.

  (PS I strongly suspect Fred Wilson already knows this, is intelligent enough to be hiring clever VCs in India, China Sudan, and doing presumably cleverer things than I suggest.

  But it annoys me that the article seems mostly - oh no! cloud is cheap, so there are no companies anymore anywhere in the world that need high risk investment. Gaaahh!)

  Here is one that is a perfect example: http://www.ted.com/talks/donald_sadoway_the_missing_link_to_...

  Edit: added link, minor fixes

• by jpkeisala on 8/23/12, 12:52 PM

  Can one start a tech company anymore without Venture Capital?