Yes, that's true. But that doesn't mean there is something wrong with the fee structure. Most of the money-losing firms would still have lost money even if th

Yes, that's true. But that doesn't mean there is something wrong with the fee structure. Most of the money-losing firms would still have lost money even if they charged zero fees. The real problem is simply that most VCs are lousy investors. But it's not uncommon for most practitioners in a field to be bad at it. Most artists are bad, for example. The point where the VC business is broken is where LPs meet GPs. Credulous LPs give money to incompetent GPs. It's not the VC model that's broken, but the LPs' judgement. Most LPs shouldn't be investing in VC. They do it in imitation of LPs past who've made lots of money that way, like big university endowments and certain family funds, but they don't know what they're doing, choose badly, and end up losing their money. A lot of them will probably pull back now, which will mean a lot of the worst performing VCs will disappear. Which is exactly what Fred has been saying. The problem is not the VC model per se, but inexperienced LPs' undiscriminating appetite for VC funds. (Yet again, the macroexpansion problem. http://news.ycombinator.com/item?id=685713 http://news.ycombinator.com/item?id=685713)