An article in The New Yorker offers a brief history of venture capital dating back to the whaling industry, discusses how the government and private sector have both participated in VC ventures, and offers some interesting thoughts on the future of the industry. Fast forward to today, and, the article contends, “a seepage of doubt is spreading, notably among venture capitalists themselves.” If investors are growing concerned why does the cycle persist? The article argues that institutionalized venture capital has created an abundance of fees, and that the lure of winning the lottery is too great:
“They do it in part from competitive pressure: if your rivals are growing wildly at an early stage, and with good hookups, you’re obliged to play the game in order to keep up. But they also do it for the chance at the lottery. Jackpots have only become bigger as venture capital has grown overcapitalized; last year exit values, the proceeds from selling shares, topped two hundred billion dollars for the first time.”
Click on the link for an interesting read.