The VC Industry Is Broken. Now What?

Photograph by Shaun Lowe

The investment team at the Kauffman Foundation believes the venture capital industry is broken and that they, or rather investors in VC funds, are partially to blame. The report condemns venture firms for being too big, not delivering returns, and not adjusting to the times. Then it blames the situation on a misalignment of incentives—namely, that limited partners investing in venture firms have done so in a way that encouraged VCs to raise mammoth funds at a time when huge hoards weren’t really warranted. Now, says the Kauffman Foundation, the chickens have come home to roost. From the report (PDF):

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