Venture Capital Had a Great 2013—But Public Markets Were Still Better
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At least one prominent venture capitalist is growing weary of discussing the lean years. In a recent series of blog posts, Upfront Ventures partner Mark Suster argues that the past 10 years or more of bad performance was a long-term shakeout of the over-investment from the 1999-2000 tech bubble.
Today, there are fewer VC firms. At the same time, the cost of high-tech entrepreneurship has dropped, while the number of connected consumers has skyrocketed, creating fertile ground for big tech industry victories, Suster argues.
“Looking ahead at the next decade, I am excited by what I believe will be viewed as one of the best and most rational investment periods for venture capital,” he says.
Ashby Monk, the executive director of Stanford University’s Global Projects Center and a regular columnist on institutional investing issues, says VC funds that successfully navigated the Great Recession deserve credit for pulling out of the worst economic climate in decades.
But Monk is less sympathetic to the idea that the tech bubble at the turn of the century is still a big factor in VC performance. He also tends to agree with the Kauffman Foundation’s bombshell 2012 report on venture investing, which said the entrepreneurship-focused foundation was rethinking its strategy after poor VC performance that it says has been indirectly encouraged by limited partners who don’t hold venture firms accountable.
“I don’t necessarily buy that we’re still dealing with this overhang from 1999. That’s a step too far,” Monk says. “I think the last five years have been fabulous for everybody, and you have seen some big exits—and yet, the returns to the LP’s aren’t there. So don’t tell me this is just a macro thing.”