That is the question for limited partners (LPs)--pension funds, endowed foundations, university investment committees, and so on. The answer, according to a new Kauffman Foundation paper, is not so fast. The authors used twenty years of data on Kauffman's investment portfolio and found misalignment and misallocation in the entire way in which LPs invest, adding up to a "broken LP investment model."
The economics of venture capital have been changing from the perspective of the entrepreneur as well as from within the industry itself. The new Kauffman paper adds another useful dimension, the perspective of the LPs, and makes several recommendations on how to avoid the "black box" of VC investing.