There is a good interview with venture capitalist Ray Rothrock of Venrock posted at Startup 130. While no-one, I hope, denies the importance of venture capital in funding risky new growth companies, there have also been major changes in the market in which VCs operate over the four decades of Venrock's existence.
First, here is Ray on the differences, which mostly have to do with capital and information efficiency:
Differences in the business are around the limited partners. These days the money comes from all sorts of institutions – foundations, endowments, retirement funds, etc. In older times, it was largely from wealthy families and individuals. As such, in the 90s the venture activity morphed into an asset class for these institutions as they diversified. The data for this asset class was based on a much smaller business, fewer venture capitalists, less money and still a fairly information inefficient world. That is all changed now. Today, success has a much higher bar because of information flow and ease of access of capital.
And now here is what's the same:
Similarities in the business are all about the entrepreneur. There are still people out there trying to invent things and change the world with their ideas. In short, entrepreneurs are still entrepreneuring. I think the personal drivers are also the same – it’s about changing things, not so much about wealth creation. Wealth often comes after success, not the other way around.
More here.
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