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Topic : The Future of Venture Capital
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Is the VC Model Broken?

Created by : Vikrant Panwar, Portfolio Manager, IL&FS Venture Corporation  | 11 21 2008 15:46:04 +0000
Industry : Hedge Funds/VCs/Private EquityFunctional Area : VC funding(Entrepreneurship)
Keywords : Venture Capital VC Model Broken VC Industry
Activity:  420 views;  last activity : 05 16 2011 05:13:27 +0000
Is the VC Model Broken?
  
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Adeo Ressi, the serial entrepreneur feels that there are simply too many venture capital funds chasing too few opportunities, with unrealistic expectations. The result, as he notes in one eye-grabbing slide, is that VC returns over the past five years have fallen below the total amount of money invested over that same time period.
By Vikrant Panwar, Portfolio Manager, IL&FS Venture Corporation  11 21 2008 15:46:04 +0000
 
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The VC is a big success in USA and other European countries. R & D and Innovation are given back seat in India. We are habituated to follow the technology created by someone. Entrepreneurship and finding new ways is not our way of doing things. We hardly try these things. VC is a long term investment and at times it may take more than a decade. We are most interested in short term gains. So the VC model is not much successful here. A VC who failed to know the best exit time can never be a successful Venture capitalist. He should not stick to the organisation he funded so long. As soon as the organisation reaches the growth stage VC shall voluntarily exit and find a new enthusiastic entrepreneur.
By Srinivas suravajhala, Asst. Manager.  | 05 16 2011 05:13:26 +0000
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Yes. The VC Model will not work. Getting funds from a VC is not difficult but the exit policy is impossible to cross. I have personally seen 3 or 4 companies who were at the mercy of VCs for every policy decision and finally shown them the exit door with lot of difficulty.
By Suryanarayan Murthy, Asst Vice President (Corporate Finance), A Hydro Power Project  | 05 16 2011 04:46:50 +0000
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If some funds are in profit, others will also act in the same way to make profit. From the last five years, VC returning over, have fallen below the total amount of money invested over that same time period. but PE is still is a better alternative market for investments So is Returns this is also good for a VC firm
By Esha Johar, Risk Analyst, Irevna  | 09 16 2009 06:39:38 +0000
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yes, PE is still is a better alternative market for investments So is Returns this is also good for a VC firm
By bhoopal , Finance/Budgeting Manager, Techinvest  | 09 15 2009 03:12:52 +0000
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ya i agree.. Have there been too many funds created, too much money poured into finding the next Facebook, Twitter or YouTube? Undoubtedly. But the VC industry is subject to the same economic forces and laws of supply and demand as any other industry — in other words, if some funds are making money, others will emerge and try to duplicate that success, even if they know the odds are against them. The same dynamic can be seen in plenty of other businesses, including the mining industry: When gold is hot, everyone wants to be (or invest in) a gold miner, even though they all secretly know that too many miners means less gold for everyone.
By Veena Gupta, Analyst, Blackstone Group  | 11 21 2008 15:47:08 +0000
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I don't think so the fact remains same, in the era of software boom and web page designing, many new companies took birth, did some profits and vanished altogether. But the company which had proper fundamental planning and were in right kind of business and were following the process properly, they are still in existent. My point is as India is getting global and the rate of growth is very high compared to other developing countries, the arbitrators grabbing the opportunity but the real investor are taking it step by step. That is why you are looking the net inflow has come down. But VC is not going to dye i rather see the vast growth in it as the market grows.
By lalit shriram raut, Freelancer, Freelancer  | 09 16 2009 07:00:06 +0000
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