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Venture Capital's New Golden Age

Article by Four Percent June 5, 2012 //   1 minute read

John Backus and Todd Hixon, CNN Money The venture capital model is dead, proclaimed the Kauffman Foundation recently. Too much available money for the VC model to succeed added Union Square's Fred Wilson. Another details 25+ stories on why the VC model is broken. Sevin Rosen, a firm known for PC and telecom hardware investments in the 1990s, started this death watch in 2006, when it aborted closing a new fund. Average VC returns for the last ten years do stink. Cambridge Associates made headlines when its 10-year cumulative U.S. VC return index went negative at (2.0%)/year in December 2010. The index popped up to 3.3%/year for the decade through December 2011. Over the same period the NASDAQ returned 2.9%/year.  But, given the illiquid nature of VC investments, investors deserve a 3% - 5% premium, at least, over public markets. Read More

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