Is too much money still screwing up the venture capital business? There is no doubt that things were out of control in the late 1990s, with everyone and their Pomeranian opening a venture firm. But how about now?
Well, some think the situation is little better. At a recent venture capital conference, David Aronoff, a newly-minted general partner at Greylock Capital, pined for the good old days:
The motto in VC used to be “Undersupply of capital for oversupply of good ideas.” But now capital markets are increasingly willing to take on risk with VCs, and this situation has turned for the worse.
I take his point, and few things ruin an investing party faster than too much money. The question is, of course, at what level does a venture capital allocation become less competitive vis-a-vis other investments? I understand that incumbent VCs might prefer other VCs get less money, but that is not the same as saying that allocations should be lower across the board.