Steve Dow, partner at Sevin Rosin Funds in Dallas, told the New York Times in 2006 that “the VC model is broken.” A recent survey from executive search firm Polachi Inc. polled more than 100 venture capital executives, 70% of which were partners or managing partners. It found that a majority, 53% of respondents, indicated the venture capital industry is “broken.” With a less than receptive IPO market and the credit markets tightening down on M&A activities, VCs are finding few exits for their existing investments. PE shops are faced with refinancing over $300 billion of LBO debt over the next two years. Endowments and pension funds that serve as the limited partners firms are reassessing their investment in the entire asset class and are hamstrung by the denominator effect. Will this funding gap affect the US’ ability to develop new technologies and create new jobs? Many ask, “Why aren’t there more Googles” and “What will be the next big thing?” Personal computers were the catalyst in the 1980s, the internet was the catalyst in the 1990s and social networking has been a catalyst in recent years, but what will be the growth driver in the next decade? With this background, this presentation will discuss the golden years of private equity, the current environment and what the future holds for this industry and entrepreneurial activity.
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