I spoke at length today with a very large (assets, not girth) private equity fund-of-funds manager. Among other things, we talked about the prospects for first-time venture funds and the flight to (perceived) quality among investors in venture funds. Appearances notwithstanding, he says it is more difficult than ever for first-time funds. You must have something really, really special to make the cut — if you want institutional money.
So, where are venture investors putting their money, if not in new funds? To a fault with the marquee venture names, he said, to the point that venture investors will even turn a blind eye if half the GPs are gone. What a wonderfully messed-up market.