I can't remember how, but this morning I came across a really good article from Fortune about the tech VC industry - it's very dated [May 2004] but still really interesting reading, particularly if you take a longer-term view.
First couple of para's below.
The all-time greats of Silicon Valley venture capital can pretty much be counted on one hand. There's Arthur Rock, who was present, checkbook in hand, at the creation of Intel. Don Valentine seeded Oracle, Apple, and Cisco--a VC trifecta for the ages. John Doerr made a fortune with early bets on Sun, Netscape, and Amazon.com. And when search star Google goes public--the waiting on that one should end shortly--sculptors will need to get busy on one more bust for Sand Hill Road's Mount Rushmore: Michael Moritz, the wily investor whose previous grand slams include early stakes in Yahoo and PayPal.
In 1999, Moritz led his firm, Sequoia Capital, to invest $12.5 million in Google. If Google goes public at the $8-billion-and-up valuation that investment bankers expect, Moritz and his partners will likely reap hundreds of millions of dollars. With that kind of payday around the corner, it is easy to understand the giddy mood in the ballroom of San Francisco's Fairmont hotel in late March. There, 100 or so fund managers for university endowments, charitable foundations, and the like have gathered for updates on their investments in Sequoia Capital. Among other activities, they are dazzled by a Q&A session with Google co-founder Larry Page, pitched on the virtues of conducting IPOs as auctions by investment-banking legend Bill Hambrecht, and enthralled by a peek into Sequoia's latest bets.
But leave it to Moritz to pour cold water on the merriment. His narrow face and high forehead make him look like a bird of prey sporting oversized round spectacles, and Moritz stands in the front of the room to deliver a sobering message: Audience members are wasting their time--and, more important, the money they manage--on venture capital. He amplifies his point with a simple image projected on a screen behind him. It shows a billfold below four boldfaced words: SIT ON IT (PLEASE!). "The notion that people should load up on venture capital as part of their overall portfolio-allocation process is just a batty idea," says Moritz later. A 49-year-old Brit, he wields his accent with rapier-like effect. "I mean, it's a recipe for disaster for themselves and the venture capital business. Any trustee of a university or any person on the investment committee of a major institution should fire the investment officer who recommends that they invest in venture capital."
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