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|Source:||New York Times Digital|
But the timing actually underscores some big changes in the venture capital business, and the increasing pressure that even marquee names like
You wouldn’t know it from all the buzz surrounding the new wave of social media and mobile start-ups, but the total dollars invested in venture deals is just a fraction of what it was during the Web 1.0 frenzy — down, even, from 2008 levels.
Meanwhile, a new breed of ”superangels,” many of them entrepreneurs who made large fortunes at venture-backed companies, is impinging on traditional venture capital turf. Plus, the global nature of the Internet business means that
Against this backdrop, the winner-take-all dynamics of the Internet business, and the fact that venture sectors like clean tech and life sciences are struggling, mean that if a prestige venture capital firm misses out on too many of the big Internet deals, it hurts. Kleiner Perkins, notably, was not involved in
For Silicon Valley Internet entrepreneurs, the changing dynamics of the venture capital finance business are not a bad thing. Starting an Internet company these days usually requires much less capital than in the past. The emergence of the superangels, combined with venture capitalists’ hunger for early-stage deals, means better terms for company founders.
For big, successful start-ups, these are also good times, in that the large venture capital firms are moving upstream into what would once have been considered private equity territory, with financing rounds in the nine figures. That gives companies like Twitter and Facebook a lot of options other than going public.
But for many rank-and-file venture capitalists, life is not so good. The institutional investors that are the backbone of venture capital finance — pension funds, insurance companies and university endowments — have generally seen poor returns on these investments over the past decade. That means it’s hard for venture capitalists to raise money.
The industry as a whole is shrinking: the number of venture capital firms in
At the elite end of the business, though, there is still plenty of clover on
The longtime Valley kingpins — Kleiner,
And that brings us back to Mr. Doerr’s friend,
In this case, what’s good for Kleiner is good for