there has been a lot of talk lately about how there is too much money in venture capital. i think there may be some truth to that, BUT i think an argument could be made that there is not enough. in other words, i just don't think there is enough evidence or analysis one way or the other.
however, the NYT gives voice to the "too much capital" perspective: "Venture Capitalists Look for a Return to the ABC's".
It lays out the general case for VC shrinkage pretty well (although it avoids many specific numbers).
I like the quote the article ends on:
Timothy Draper, founder of Draper Fisher Jurvetson, thinks there should be more venture capitalists, not fewer. “I don’t think we have enough venture capitalists to spread the wealth to the seven billion creative minds out there,” he said.
I think it's noteworthy that Draper is actually doing something about the key issue here - exits.
I am suspicious whenever anyone says they have too much money - esp. investors. It strikes me as blaming your client (the LP) for just giving you all that money (which BTW you earn 1-2% on regardless of performance).
I agree with Draper - there are always an abundance of opportunities available - as long as humans complain about anything they will be willing to offer entrepreneurs money for alleviating their "pain points."
Once the exit environment improves (and it can only get better at this point as it is barely alive), then we'll probably see less complaining about VCs having too much money.
