There’s a lot of money floating around Silicon Valley right now, and it’s becoming easier and easier for entrepreneurs to get access to the capital they need to get their companies off the ground. Resources like AngelList are trying to level the playing field, and facilitate conversations between founder and investor, and the passage of the JOBS Act will alter the landscape for early-stage companies by giving them access to crowdfunding from the masses. There are even charity initiatives like the ones launched by Execand Motion To Dismiss Cancer that give a select few access to top entrepreneurs and VCs.
At a very fundamental level, the venture capital business is being reshaped. As the Kauffman report points out, most VC funds aren’t generating more than the three to five percent return one finds in the public markets — the yield investors expect, the report finds. In fact, the report states “VC returns haven’t significantly outperformed the public market since the late ’90s”.
Speaking to a crowd at the Grind work space in New York last week, Fred Wilson addressed this ongoing shift, saying, “there’s two times as much capital in the venture capital business today than we, the professional investors who make up the venture business, can actually put to work intelligently.”
This isn’t so good for VCs, Wilson says, but it is for entrepreneurs. Of course, the fact of the matter is that the top VC firms, super angels, and angel investors have unparalleled deal flow, they see hundreds, sometimes thousands of pitches, are privy to information few outside very small circles ever get to see. They are custodians of that equally valuable currency — information. As hard as the media and others work to reveal the goings-on behind the scenes, as Chris Dixon points out, most coverage doesn’t reveal 90 percent of the relevant information. This is true not just of funding announcements in tech publications, it’s true of panels at conferences, interviews, video, and more. (cont … Tech Crunch)