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Grim Numbers Point to the End of the Venture Capital Era


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Silicon Valley has passed an important milestone that may mark the end of one era and the beginning of another.

This dividing line in history was revealed this summer in the latest report from the National Venture Capital Association, which showed that 10-year returns on venture capital investments had turned negative at the end of 2009, and nose-dived during the first quarter of 2010. Let me translate what might sound like some insider mumbo jumbo: Venture capital investing, the lifeblood of the valley's innovation economy, has become a sucker's bet.

In the game of venture capital, the 10-year return on investments is one of the most closely watched benchmarks of performance. Everyone can have a bad year here or there. And in the short run, there's always going to be sluggishness from an economic downturn or two. But none of those excuses can explain away a whole decade of failure.
No, there's something bigger going on. The venture industry is in free fall. And that has big implications for the Silicon Valley economy, especially when it comes to job creation.

From San Jose Mercury News
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