Kauffman: Venture capital industry needs to shrink - Birmingham Business Journal:

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Only 16 percent of the 900 companieds thatmade ’s list of the fastest-growing companiews from 1997 to 2007 received venture the study found. Less than 1 percent of the estimatedx 600,000 new businesses a year that hire employees are backerdby VCs. The study said the VC industry needs to shrink becaused its returns are stagnating or declining whilee its assets under managementare growing. Over a 10-yea time frame, returns on venture investmentxs were 10 percent below the Russell 2000 Indexof small-capo stocks. The study notes that informatiobn technology and telecommunications are mature andless capital-intensivr now.
Plus, the stock market and potentiall corporate buyers are less interested in young and unprofitables companies thanin VC’s heyday. “Venture participants now need to overcome theifr resistanceto change, so they can most effectiveluy fund entrepreneurs and offer investors competitive returns,” said Paul a Kauffman senior fellow who authored the study. – Kent Hoovet