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The Canarie is Dead Something is Wrong in Venture Capital -Q3 2008-
The Lofty Goals of Venture Capital ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],These are all positive goals, but are they being achieved?
Face the Gritty Reality of Operations ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Theory Flaw
In a Model of “One Hit Wonders” “ The story told by Bon French, CEO of Adams Street  [a fund of funds] , is that a full 5-points of the 20-points of return over that 20-year period is attributable to a single company exit within a single VC firm portfolio: Benchmark Capital's investment in eBay.” SOURCE: Startup Conversations VC Blog, April 2008 Investing billions over 20 years boils down to getting one hit?
The Presentation Thesis ,[object Object],[object Object],[object Object],[object Object]
1. Venture Capital is Broken ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Let’s Fund our Friends companies in VC networks meet strict VC guidelines other companies that need capital unfunded funded <10%  SOURCE: TheFunded.com Membership Applications Google and eBay are in the small number of “other” deals.
So our Friends can save Us How many of these M&A buyers were also VC backed? “ Will you buy my other company, please… at a premium?” SOURCE: NVCA / Thompson Reuters Exit Poll M&A IPO M&A IPO Similar number of M&A deals, yet the prices skyrocketed.
When the Going gets Tough… 2008 YTD IPO valuations are one third less than in 1998. SOURCE: NVCA /  PwC MoneyTree Reports
2. True Innovation is Undercapitalized ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Not a lot of Portfolio Diversity ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],SOURCE: NVCA /  PwC MoneyTree Reports Where is Material Sciences?  How many of these are really just Web 2.0 deals?
3. The Inflection Point is Here ,[object Object],[object Object],[object Object],[object Object],[object Object]
A Line has been Crossed Fundraising Exits SOURCE: NVCA / Thompson Reuters Exit Poll SOURCE: NVCA / Thompson Reuters VC Fundraising Q3 Is more money going into the VC model than coming out? Blue is the total economic value created by VCs. Green is the total amount of money raised by VCs.
and Nothing Changed… SOURCE: NVCA / Thompson Reuters VC Fundraising Q3 1 new VC firm is funded for every 4 existing firms funded. How many “new” firms are started by existing VCs? New Funds Follow-on into existing Funds
4. It’s Time for Change ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
in the Deal Terms, too… ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
and, while you’re at it… ,[object Object],[object Object],[object Object],[object Object],[object Object]
Why change? because VC firms  have little to lose,  and a lot to gain by doing things better…

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TheFunded - Canarie

  • 1. The Canarie is Dead Something is Wrong in Venture Capital -Q3 2008-
  • 2.
  • 3.
  • 4. In a Model of “One Hit Wonders” “ The story told by Bon French, CEO of Adams Street [a fund of funds] , is that a full 5-points of the 20-points of return over that 20-year period is attributable to a single company exit within a single VC firm portfolio: Benchmark Capital's investment in eBay.” SOURCE: Startup Conversations VC Blog, April 2008 Investing billions over 20 years boils down to getting one hit?
  • 5.
  • 6.
  • 7. Let’s Fund our Friends companies in VC networks meet strict VC guidelines other companies that need capital unfunded funded <10% SOURCE: TheFunded.com Membership Applications Google and eBay are in the small number of “other” deals.
  • 8. So our Friends can save Us How many of these M&A buyers were also VC backed? “ Will you buy my other company, please… at a premium?” SOURCE: NVCA / Thompson Reuters Exit Poll M&A IPO M&A IPO Similar number of M&A deals, yet the prices skyrocketed.
  • 9. When the Going gets Tough… 2008 YTD IPO valuations are one third less than in 1998. SOURCE: NVCA / PwC MoneyTree Reports
  • 10.
  • 11.
  • 12.
  • 13. A Line has been Crossed Fundraising Exits SOURCE: NVCA / Thompson Reuters Exit Poll SOURCE: NVCA / Thompson Reuters VC Fundraising Q3 Is more money going into the VC model than coming out? Blue is the total economic value created by VCs. Green is the total amount of money raised by VCs.
  • 14. and Nothing Changed… SOURCE: NVCA / Thompson Reuters VC Fundraising Q3 1 new VC firm is funded for every 4 existing firms funded. How many “new” firms are started by existing VCs? New Funds Follow-on into existing Funds
  • 15.
  • 16.
  • 17.
  • 18. Why change? because VC firms have little to lose, and a lot to gain by doing things better…