Venture Capital must prioritize investing in and rewarding founders…

Praveen Paranjothi · 2024-12-03T07:10:38.000Z

The venture capital industry must prioritize investing in and rewarding founders to create stronger incentives for entrepreneurship. Founders often endure years of relentless effort before identifying a scalable model, yet this critical journey remains undervalued. Raising more capital without expanding the pool of founders and opportunities distorts the market - leads to inflated valuations and diminished returns. A sustainable approach must focus on fostering and supporting a larger, more diverse founder ecosystem to drive long-term success and innovation. "With lots more cash chasing roughly the same supply of startup talent, industry-wide returns have duly disappointed. According to Cambridge Associates, an investment firm, the LPs of American VC firms have made compound annual returns of 1.45% in the past three years, compared with 41% in the three years before and less than the 8% they could have earned in public markets. As one VC veteran sums up with astonishing candour, “You would be better off investing in Microsoft or Meta.” https://www.economist.com/business/2024/11/28/has-sequoia-capital-outgrown-its-business-model

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Venture Capital must prioritize investing in and rewarding founders… | Newnex