IF VENTURE’S BROKEN, WHAT’S THE FIX? | PART 1 of 2

Too Long; Didn't Read

The venture capital industry, according to the Ewing Marion Kauffman Foundation, is broken. In a now seminal article originally published in May of 2012, the Kauffman Foundation’s investment team chastises venture firms for being too big, delivering subpar returns, and remaining stuck in the past. They note that in their twenty-year history of investing in venture funds, only 20% of a 100 total investments “generated returns that beat a public-market equivalent by more than 3 percent annually.”¹ Moreover, after considering the “cumulative effect of fees, carry, and the uneven nature of venture investing, 78% did not achieve returns [that were] sufficient [enough a] reward for patient, expensive, long-term investing.”¹