HAS VENTURE CAPITAL STRAYED FROM ITS ROOTS?

‘Venture capital’ has become a household concept. There is a proliferation of funds, valued at almost US$300 billion globally. It has turned into an asset class of its own – generating interest from traditional sources of finance like pension funds and family offices but also the retail investor who wants a slice of the entrepreneurial action. We see the rise of the professional entrepreneur, a career path that seems as normal as banking or engineering. Venture capital, just by the size of the funds under management today, has become a ‘financial art’ of sorts. It has not only become institutionalised, one could say that it has indeed become commoditised. Consider the portfolio approach to investments, where one bets on the probability that some will pay off while others won’t. The “1 in 10” thought process also means that venture capitalists today have to be brutal about cutting off the losers and backing the winners, doubling down on those that may stand that 10x chance of winning the odds. Has the time come for us to rethink VC in today’s world? Business, if treated as a force for good, can only create a system that generates returns in an ethical, balanced way.  Read More >>

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