Roundtable Recap: December 11 – The Global Venture Capital Industry Needs to Shrink in Size – A Conversation with Gus Tai

During this week’s roundtable, we had Gus Tai, veteran Venture Capitalist and a close friend, in conversation with me on why the Venture Capital industry needs to shrink in size.

We kicked off the conversation with a couple of charts showing the trajectory of the industry over the last decade and analyzed the trends.

Clearly, this is a contrarian perspective. The entire discussion is FULL of contrarian perspectives.

Here are some points we covered:

Sramana Mitra: We’ve had a hyper-active Venture Capital industry since the mid-nineties when the Internet came into being as an engine of innovation. In thirty years, the industry has accumulated enough data to show that the vast majority of VC-funded startups fail. Some fail altogether. Some succeed in building customers, revenues and profits, but are slow growth, and their exit prospects are not in line with the capital raised. So they become zombies. And yet, entrepreneurs still believe Entrepreneurship = Financing. They mindlessly chase venture capital and raise money without a clear idea of how they plan to build a high velocity company. Dumb money abounds. They set hundreds and thousands of entrepreneurs up for failure. How do we change this dynamic?

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