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Saturday, October 07, 2006
Is The VC Model Broken?
The traditional venture model seems to us to be broken, says,Steve Dow, a general partner at Sevin Rosen Funds, a frim which has in the past helped the rise of several good brands in the tech industry. The high-risk, high-return venture capital business may have turned into all risk and no return. The message here is that it could not continue to take their money — at least not for the time being. A terribly weak exit environment, referring to the dearth of initial public offerings and to a market for acquisitions at valuations that it considers too low to deliver the kind of returns that venture investors expect are amongst the factors for blame. While the likes of YouTube and Facebook are said to be entertaining acquisition offers in the $1 billion neighborhood, that pronouncement may seem surprising. But Mr. Dow said those “megadeals” were rare and were not enough to sustain an entire industry.
Category :Venture Capital |
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