What the VC Industry Upheaval Means For Startups

With declining returns and less money spread across more deals, venture capital is in the midst of a major shift. Here's what capital-seeking companies should know.

The National Venture Capital Association yesterday issued a report card of sorts for the venture industry, and the results were pretty middle-of-the-road. The organization, working with research firm Cambridge Associates, noted that venture returns were still higher than the returns for the stock market over the near and long term, but were falling lower than returns generated 15 and 20 years ago. The observation helps drive home the argument that the VC industry needs to manage a lot less cash if it wants to keep generating outsized returns. For startups looking for cash, such upheaval after 10 years of VC largess is going to change who gets funded and how much they get.

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