Ten-year returns for venture capital, which reached 36percentt in 2000 at the height of the dot-com bubble, shrank to 14percentt in the period ending June 30, according to Cambridge Associates, though venture capital has still outperformed the public markets.
Big technology firms have lots of cash to spend: on April 28th HP announced that it was buying Palm, a venture-backed maker of smart-phones, for $1.2 billion.The snag is that valuations may not have risen enough to make juicy returns for venture firms.
By Andreessens measure, 15 deals account for 96% of the returns for venture capital in any given year.
Horowitz' remarks come in spite of an ongoing debate about disappointing 10-year returns for venture as an overall asset class.
That would mark a nice return for the venture capitalists who have invested $142m in Yammer.
For Idenix, the deal would provide a return for its venture capital investors and executives at a time when going public is extremely hard.
The median return for all venture funds was just under 5%, or worse than what Treasury bonds would have given you.
The median annual return for all venture funds raised in 2000, the peak of the dot-com craziness, is 1%, according to research firm Cambridge Associates.
As explained in the Kauffman Foundation research, the overall return for the venture capital industry has been quite poor (the average VC fund barely returned investor capital after fees).
"They are generally too big in terms of required capital and too small in terms of returns for the venture capital community".
