The venture capital market is crumbling. It used to cost a lot of money to build a company, but not anymore and VCs are no longer the gatekeepers to success.

The venture capital market is crumbling. It used to cost a lot of money to build a company, but not anymore and VCs are no longer the gatekeepers to success. Their exits are puny and most of them fail. They are hunting needles in haystacks. The supply is greater than demand. Their 2+20 scheme is too expensive. The wealthy don't need the VCs anymore and the returns they are bringing in aren't worth the risk. This crap from the NVCA is not an isolated event. This absurd notion of a founder visa is another data point in the trending decline of venture capital. VCs are losing their power. They are struggling to keep it. They are crying out for help. They are being destroyed by scrappy startups and small funding orgs like YCombinator. VCs are going the way of universities and print publications and even television. The barriers to entry are not what they used to be. The Internet, and tech in general, is the revolution they claimed it was to their original investors -- so revolutionary in fact that it is defeating even their own industry. Why did they think they were immune to Moore's law. As technology costs decrease, supply increases. VCs operated on supply and demand just like every other industry. They controlled access to the supply of capital to startups and to the supply of startups for investors - but not anymore. The Founder Visa is another effort on their part to regain control of that startup market. If they can increase the supply of ventures only they can enable, then they regain power over other startups. If they can get 50% of a startup from India for $1M, why would they fund the same startup for the US that wants to give up only 20%? Technology is changing so quickly that similar ideas are popping up all over the place. There are a multitude of ideas the vcs can fund. Look at TwitVid here a couple months ago. All the signs are there. The question is, are VCs going to be able to create hype around another industry that actually needs them or are they going to try to defend the fort like the newspapers are doing now? The Internet might just be the biggest innovative idea since the printing press. It could be a long time until another change of this magnitude will come along. Venture Capital will always have a place in a growing society, but the opportunities are declining and the number of VC firms will decline as well. Here are the tips for VC: Make your operations more scalable, increase diversity, fund in smaller amounts and expect less control and equity in exchange. EDIT: I want to add that I know this is true because VC firms have approached us several times wanting to invest. Other companies in our market were funded in the millions by VCs and they are already gone. They couldn't build the kind of revenue or customer base the VCs expect, but a smaller startup like we are can easily sustain itself. VC investment is having a negative impact on the potential success of a business because expectations are wildly out of bounds. It takes longer to make money now and the competition for the business idea is so great that investment of capital is not a differentiator like it used to be. A VC funded startup may have more capital than we have, but we have _way_ more time than they have.