Bill Gurley, a venture capitalist at Benchmark Capital, has written one of the clearest explanations yet about what is happening to the venture capital industry.
Bottom line: Don’t be surprised if the number of VC firms in the U.S. is cut in half. And don’t be surprised if the average Silicon Valley resident doesn’t notice.
The reason: The VC industry may well return to the size it was during the mid-1990s, and this will be healthy for the industry overall.
Gurley concludes:
June 5th: The AI Audit in NYC
Join us next week in NYC to engage with top executive leaders, delving into strategies for auditing AI models to ensure fairness, optimal performance, and ethical compliance across diverse organizations. Secure your attendance for this exclusive invite-only event.
We have seen over and over again how excess capital can lead to crowded emerging markets with as many as 5-6 VC backed competitors. Reducing this to 2-3 players will result in less cutthroat behavior and much healthier returns for all companies and entrepreneurs in the market. Additionally, at a stabilized market size of well over $15B a year, there should be plenty of capital to fund the next Microsoft, Ebay, or Google.