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Of course a VC does not want you wasting his money and will finger wag all day long to try to make entrepreneurs behave. However his analysis focusing on isola

Of course a VC does not want you wasting his money and will finger wag all day long to try to make entrepreneurs behave. However his analysis focusing on isolated economic indicators is missing the forest for the trees (presumably willfully). Why is money cheap? Because investors have no place to put their money. The accelerating consolidation of wealth within the super rich (ie. the 0.01% funding VCs) and the pathetic amount of tax and philanthropy mean they have nowhere to put their money. It is going to be impossible to get the returns they demand because of the decimation of the middle class and on a larger scale the impossibility of sustaining 20th century level growth over the long term. Tech is a long way from being an unattractive investment because it still provides the best avenue to scaling a business quickly. It will survive a tremendous amount of douchebag entrepreneur cash burning simply because there's no better game out there, and until society comes to term with what's actually happening economically rather than wishfully believing the juked stats the government puts out to get re-elected I don't see any better investment opportunities coming along. Let the party continue...

jeffreyrogers 12y ago
You can still put money in an index fund (e.g. anything from Vanguard) and get reasonable returns (better than most investors at least).
- gphil 12y ago
  Indeed, the risk-adjusted returns for VC as an asset class are bad compared to other options. I think there's more to the story than "the rich are running out of places to put their money."
- mathattack 12y ago
  You can, but many investors are concerned about the stock market as a whole being overpriced. "Bonds are overpriced, Commodities are overpriced, Equities are overpriced, and Real Estate is overpriced. When rates go up they will all tank." Of course this is a first world problem. I used to say "Invest in your own human capital" but I took a look at the cost of private schools nowadays, and they're overpriced too. :-)
  - ryandvm 12y ago
    I'd hate to see what those investors think of paying 10 billion for SnapChat...
    - mathattack 12y ago
      "Oh sh*t we should have gotten in at 3"? :-)
surfearth 12y ago
The majority of funding for the VC industry does not come from the super rich, but rather endowments, pensions, and other forms of institutional capital. These institutions do have many other markets where they invest their capital, most of which are more attractive on a risk-adjusted basis when taking into consideration the illiquid nature of venture capital as well as the high fees.
- dasil003 12y ago
  You sound like you know a lot more about the VC industry than me, but if what you say is true, why is there still so much VC money flowing?
  - nostrademons 12y ago
    Because there is a lot of money flowing everywhere. Total VC investment through Q2 2014 is on the order of $22.7B [1], so if this continues, the VC industry is likely to invest about $45B through the year of 2014. At the same time, the total market cap of the S&P 500 is $17.5 trillion [2], and it's increased by about $2T so far this year [3]. Total daily volume in the S&P 500 is $1.4B [3]; in 3 weeks, more money changes hands in the S&P 500 than it does in 2 quarters for the VC industry. [1] http://www.nvca.org/index.php?option=com_content&view=article&id=344&Itemid=103 http://www.nvca.org/index.php?option=com_content&view=articl... [2] https://www.google.com/search?q=s%26p+500+market+cap https://www.google.com/search?q=s%26p+500+market+cap [3] https://www.google.com/finance?q=INDEXSP%3A.INX&ei=2qMcVJCGGOGJiAKFrYDIDw https://www.google.com/finance?q=INDEXSP%3A.INX&ei=2qMcVJCGG...
  - mbesto 12y ago
    VC (the VC money you and I all see on TC every day) is just one asset class of many. In most funds, it usually represents < 10% (correct me if I'm wrong) of the total fund. Since the returns of a few of the funds are consistently giving high returns this 10% might increase over time. But for now, VC is largely regarded as "high risk, high return". Generally speaking, VC and hedge funds are TERRIBLE places to put your money, but funds still put money into them because it spreads their whole portfolio risk.

jeffreyrogers 12y ago

You can still put money in an index fund (e.g. anything from Vanguard) and get reasonable returns (better than most investors at least).

gphil 12y ago
Indeed, the risk-adjusted returns for VC as an asset class are bad compared to other options. I think there's more to the story than "the rich are running out of places to put their money."
mathattack 12y ago
You can, but many investors are concerned about the stock market as a whole being overpriced. "Bonds are overpriced, Commodities are overpriced, Equities are overpriced, and Real Estate is overpriced. When rates go up they will all tank." Of course this is a first world problem. I used to say "Invest in your own human capital" but I took a look at the cost of private schools nowadays, and they're overpriced too. :-)
- ryandvm 12y ago
  I'd hate to see what those investors think of paying 10 billion for SnapChat...
  - mathattack 12y ago
    "Oh sh*t we should have gotten in at 3"? :-)

surfearth 12y ago

The majority of funding for the VC industry does not come from the super rich, but rather endowments, pensions, and other forms of institutional capital. These institutions do have many other markets where they invest their capital, most of which are more attractive on a risk-adjusted basis when taking into consideration the illiquid nature of venture capital as well as the high fees.

dasil003 12y ago
You sound like you know a lot more about the VC industry than me, but if what you say is true, why is there still so much VC money flowing?
- nostrademons 12y ago
  Because there is a lot of money flowing everywhere. Total VC investment through Q2 2014 is on the order of $22.7B [1], so if this continues, the VC industry is likely to invest about $45B through the year of 2014. At the same time, the total market cap of the S&P 500 is $17.5 trillion [2], and it's increased by about $2T so far this year [3]. Total daily volume in the S&P 500 is $1.4B [3]; in 3 weeks, more money changes hands in the S&P 500 than it does in 2 quarters for the VC industry. [1] http://www.nvca.org/index.php?option=com_content&view=article&id=344&Itemid=103 http://www.nvca.org/index.php?option=com_content&view=articl... [2] https://www.google.com/search?q=s%26p+500+market+cap https://www.google.com/search?q=s%26p+500+market+cap [3] https://www.google.com/finance?q=INDEXSP%3A.INX&ei=2qMcVJCGGOGJiAKFrYDIDw https://www.google.com/finance?q=INDEXSP%3A.INX&ei=2qMcVJCGG...
- mbesto 12y ago
  VC (the VC money you and I all see on TC every day) is just one asset class of many. In most funds, it usually represents < 10% (correct me if I'm wrong) of the total fund. Since the returns of a few of the funds are consistently giving high returns this 10% might increase over time. But for now, VC is largely regarded as "high risk, high return". Generally speaking, VC and hedge funds are TERRIBLE places to put your money, but funds still put money into them because it spreads their whole portfolio risk.