If you wish to know why the venture-capital industry is being downsized and reconfigured in ways than would have been unimaginable a decade ago, I advise you to read the dispassionate, logical elucidation published earlier this week by Benchmark Capital’s Bill Gurley.
He begins by noting that many theories attempt to diagnose the affliction that has seemingly debilitated, if not broken, the VC industry. He then patiently explains what he sees happening from his front-row seat as a venture capitalist.
I won’t offer any spoilers. I think it’s well worth your time to amble over to his blog and read the entire post yourself.
Suffice it to say, Gurley follows the money from its well-heeled sources downstream into various asset-allocation vehicles. He explains how, over the years, asset-allocation models have changed and why, and then takes a well-reasoned stab at why he believes a leaner but sufficiently vital VC industry will emerge from all the creative destruction.