Interesting stat from a new McKinsey report on global capital markets:
Total market capitalization of U.S. equities: $14.3-trillion (2003)
Total U.S. venture capital under management: $100-billion (2003)
Put another way, U.S. venture capital assets are roughly 0.7% of U.S. equity capitalization, a vanishingly small number.
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Agreed. There is entirely too much money chasing too few good deals in venture capital.
This goes a long way to explaining why, on average, the rates of return on VC money are below target rates of return.