Vinod Khosla, who raised about $2B in Venture Capital funds recently, expresses in an article on Reuters PEHub that he does not like the Venture profession much. To which purportedly Jim Breyer, partner at Accel responds:
Total BS from this snake oil salesman. At 70+ years old with no friends left, he wants us to like him now. Oh puuuhhhlease! This guys is a jerk, dont take money from him, stay away as far as you can. Khosla is always about Khosla, super arrogant punk. He will destroy your company.
To which I need to respond:
Well Jim, as the former Chairman of the NVCA you should be ashamed of the “best practices” of Venture Capital as well. Negative 10 year IRRs, a handful of companies with any socioeconomic value produced by VC as the arbitrage in an 80% greenfield and Venture Capital performing under the adoption rate of technology (in the worst of economic circumstances), and a loss of trust by the public in that arbitrage is the despicable outcome of the mediocrity that holds our most precious asset (innovation) in a headlock.
Perhaps what Vinod is eluding to is that Venture Capital is a mediocre asset class and arbitrage despite the enormous capacity and adoption greenfield to innovate. With less than 35 out of 790 (original) VCs making any(!) money and around ten doing so with Venture Capital as the monolithic thesis, Venture Capital has proven to be the improper economic construct to drive innovation.
And I can fully understand why few smart people want to be associated with that performance or its “best practices”.
Venture Capital is a dumb economic construct to capture and arbitrate our capacity to innovate. For reasons why, visit The State of Venture Capital.
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