VCs: Stop Us or We’ll Patriotically Invest Again

Yesterday Intel Capital and some 23 fellow VC travelers announced that they would invest $3.5-billion in U.S. startups over the next two years. Wow, right? An act of economic patriotism?

Well, not so much. By my quick scan, seven of the members of the Intel venture investing cadre (firms like DFJ, NEA, Canaan, KP, etc.) are among the twenty largest and most active investors in the U.S., and the rest are hardly shrinking investing violets. If you recognize that the current pace of investing among U.S. VCs is around $18-billion a year, and the biggest and most active firms represent a disproportionate share of that – conservatively say 10% – then, at the low end, we might expect these 24 firms to invest somewhere around $1.8 billion this year. That works out to $3.6-billion over the next two years, or roughly what they got all those headlines yesterday for promising they’d invest.

Now, I’m not saying they should invest more than that. I have actually argued that investing less would be good for the economic health of the venture industry, which has ebbed badly in recent years. Nevertheless, saying that you’ll heroically and patriotically do what you were likely going to do anyway shouldn’t get press (I’m looking at you, NY Times, among others).

[Update] I see Dan Primack at PE Hub has a similar perspective.