The VC Model is Broken, Several Perspectives

There has been a lot of chatter in the blogshpere about the VC model being broken.

Adeo Ressi of theFunded, kicked off the recent discussion with his presentation at HBS. The telling slide from the presentation is #13 showing more money going into the VC model than coming out.

Fred Wilson from Union Square Ventures responded with his usual insight.

Furqan Nazeeri x EIR at Softbank Capital and now founder of presents some numbers to show the VC model is really broken, and the negative impact it will have on startups.

Paul Graham of Y Combinator fame talks about the VCs possibly becoming less relevant as a result of this downturn.

A good variety of perspectives on an important subject for us.

First of all, lets recognize that each of these commentators comes from the Web startup space, which you will agree does not have the same requirements as a BioTech startup.

With that in mind, which if any opinions do you agree with? How do you see this issue shaking out in the next couple of years?

One thought on “The VC Model is Broken, Several Perspectives

  1. The next two to three years will be the years of the Angel and Friends & Family type of investments.
    Startups got too drunk with VC money (read: smaller version of our financial crisis), blew it like Las Vegas whales, and now “you know what” has hit the fan.
    Angels and F&Fs will require more scrutiny. Angels got nowhere good to put their money… so if you are any good, they will open their valet for you. But you better be earning revenue.
    I really think that the rocketship model is what is broken. You have to crawl, walk, run. Start with F&F, graduate to Angel, and if you are really worth it, than VC.

    Just my 2 cents.

    Apolinaras “Apollo” Sinkevicius

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