As money pours in for start-ups, can funds improve results?
Executive Summary
Venture capital in the United States has matured as an industry, and with maturity comes fear of complacency. Many of its stars are reaching retirement age, and the sector faces questions about its inability to beat stock market returns, let alone match its storied performance of the 1990s, when the industry and high tech both rose to prominence. New types of investing approaches such as crowdfunding; increased vigor and coordination by “angel” investors; and greater interest in start-ups by private equity firms, hedge funds and mutual funds mean venture capitalists are facing growing competitive pressure. The industry's clubbiness has brought questions about its lack of diversity, and fears of a new tech bubble raise concerns that VCs are fueling conditions for another economic downturn. Even so, global interest in finding the next great start-up is soaring, opening up more opportunities for venture capital.
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Resources
Bibliography
Books
Ante, Spencer E., “Creative Capital: Georges Doriot and the Birth of Venture Capital,” Harvard Business Review Press, 2008. A journalist examines the life and business times of Georges Doriot, making the case for him as the father of modern venture capital.
Bussgang, Jeffrey, “Mastering the VC Game: A Venture Capital Insider Reveals How to Get From Start-Up to IPO on Your Terms,” Portfolio/Penguin, 2011. An entrepreneur turned venture capitalist lays out how investing works for start-up founders.
Draper, William H., “The Startup Game: Inside the Partnership Between Venture Capitalists and Entrepreneurs,” Palgrave Macmillan, 2012. A longtime VC reflects on his family, three generations of which have been venture capitalists, and how the venture capital industry has evolved.
Rao, Arun, and Piero Scaruffi, “A History of Silicon Valley,” Omniware, 2012. An investor/entrepreneur and a researcher/writer examine the emergence of Silicon Valley from the formation of Stanford University to the present.
Saxenian, AnnaLee, “Regional Advantage: Culture and Competition in Silicon Valley and Route 128,” Harvard University Press, 1994. A University of California, Berkeley, professor who specializes in regional economics develops a novel theory for why Silicon Valley became a powerhouse for technology start-ups, displacing its East Coast predecessors.
Articles
“Kleiner Perkins and Ellen Pao: A Fortune Guide,” Fortune, March 27, 2015, http://tinyurl.com/
Burleigh, Nina, “What Silicon Valley Thinks of Women,” Newsweek, Jan. 28, 2015, http://tinyurl.com/
Griffith, Erin, and Dan Primack, “The Age of Unicorns,” Jan. 22, 2015, Fortune, http://tinyurl.com/
Lacy, Sarah, and Michael Carney, “John Doerr's last stand: Can a dramatic shakeup save Kleiner Perkins?” PandoDaily, Dec. 11, 2013, http://tinyurl.com/
Lee, Aileen, “Welcome to the Unicorn Club,” TechCrunch, Nov. 2, 2013, http://tinyurl.com/
Moritz, Michael, “Arthur Rock, the Best Long-Ball Hitter Around,” Time, January 1984, http://tinyurl.com/
Reports and Studies
“MoneyTree Report for 2014,” the National Venture Capital Association and PricewaterhouseCoopers, February 2015, http://tinyurl.com/
“2015 Tech IPO Pipeline Report,” CB Insights, http://tinyurl.com/
“Venture Capitalists Oral History Project,” University of California at Berkeley Library, 2010, http://tinyurl.com/
“We Have Met the Enemy … and He Is Us,” Ewing Marion Kauffman Foundation, May 2012, http://tinyurl.com/
The Next Step
Diversity
Guynn, Jessica, “Venture capital is facing up to its diversity problem,” USA Today, Dec. 8, 2014, http://tinyurl.com/
Hiles, Heather, “Silicon Valley Venture Capital Has a Diversity Problem,” Re/Code, March 18, 2015, http://tinyurl.com/
Woodward, Curt, “Venture capital's diversity problem isn't just bad PR—it's bad for business,” Beta Boston, March 31, 2015, http://tinyurl.com/
Funding Bubbles
Garofoli, Joe, “This is no bubble, but get ready for a ‘correction,’ top investment banker warns,” San Francisco Chronicle, May 6, 2015, http://tinyurl.com/
Koh, Yoree, and Rolfe Winkler, “Venture Capitalist Sounds Alarm on Startup Investing,” The Wall Street Journal, Sept. 15, 2014, http://tinyurl.com/
Waters, Richard, “Dotcom history is not yet repeating itself, but it is starting to rhyme,” Financial Times, March 12, 2015, http://tinyurl.com/
Investment Returns
Chayka, Kyle, “The Hubris of Venture Capital,” Pacific Standard, April 24, 2015, http://tinyurl.com/
Mulcahy, Diane, “Venture Capitalists Get Paid Well to Lose Money,” Harvard Business Review, Aug. 5, 2014, http://tinyurl.com/
Weisul, Kimberly, “Venture Capital Funds Start to Make Decent Money. This is News,” Inc., May 29, 2014, http://tinyurl.com/
Social Capital
Doom, Justin, “Musk Solar Strategy Used as Model for Record Investments,” Bloomberg Business, Sept. 15, 2014, http://tinyurl.com/
Max, Sarah, “Venture Capital Firm Invests in Start-Ups With a Social Mission,” The New York Times, Oct. 27, 2014, http://tinyurl.com/
Wallace, Alicia, “Colorado equity fund testing waters of ‘impact’ investments,” The Denver Post, April 24, 2015, http://tinyurl.com/
Organizations
Angel Capital Association
10977 Granada Lane, Suite 103, Overland Park, KS 66211
913-894-4700
www.angelcapitalassociation.org
Association that represents angel investors in the United States and provides a clearinghouse of information for angel investors and entrepreneurs, including network resources, research and webinars.
European Venture Capital Association
Bastion Tower, Place du Champ de Mars 5, B-1050 Brussels, Belgium
32 2 715 00 20
www.evca.eu/
Represents European venture capitalists and private equity investors; also offers information on how European entrepreneurs can find funding.
Ewing Marion Kauffman Foundation
4801 Rockhill Road, Kansas City, MO 64110
816-932-1000
www.kauffman.org
Foundation that is dedicated to entrepreneurialism and economic development.
Global Impact Investing Network
30 Broad St., 38th Floor, New York, NY 10004
646-837-7430
www.thegiin.org/
Organization that represents social impact investors and develops standards for measuring social and environmental investments.
National Venture Capital Association
25 Massachusetts Ave., N.W., Suite 730, Washington, DC 20001
202-864-5920
www.nvca.org
Trade association for U.S. venture capital firms that also provides research on the industry.
Small Business Administration
409 3rd St., S.W., Washington, DC 20416
800-827-5722
www.sba.gov
U.S. agency that helps Americans start and build businesses; also provides information on entrepreneurship and offers financing and advice.
The Indus Entrepreneurs (TIE)
415 Oakmead Parkway, Sunnyvale, CA 94085
408-567-0700
http://tie.org
International association of entrepreneurs that organizes conferences to support entrepreneurial development in 18 countries.
DOI: 10.1177/2374556815590736