There has been a lot of chatter regarding Howard Anderson's "Good Bye to VC" piece. Commentary has been posted by Messrs. Feld, Wilson, and Hibbard. The gist of the piece is that markets are now rational, and thus historical VC returns are now impossible to achieve, especially when there is so much capital chasing few deals. I agree with Fred Wilson, this is nonsense. Pity the VC who depends on an irrational market to generate superior returns. I think this is where the venture capital model truly shines, not only in terms of bringing capital together with interesting technology, but also in adding value via Board activities, networks, etc., etc. This phrase really irritated me (my emphasis):
During the boom times, VCs financed more than 5,000 new companies a year in information technology, communications, biotechnology, and the Internet. The problem is that the buyers of new technology cannot possibly utilize all this stuff. There is a very real limit to what can usefully be deployed.
I didn't realize that biotechnology was "stuff" which we had in abundance. Perhaps he is already aware of the various therapies that are out there to cure diabetes, cancer, because I'm not, and I'm generally on top of "stuff" like this.
Please, Mr. Anderson, don't include biotechnology into your bucket of "stuff".
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