Wednesday, June 10, 2009

Study: U.S. Venture Capital Industry Needs To Shrink

A study released today by the Ewing Marion Kauffman Foundation concludes that the U.S. venture capital industry needs to shrink, in order to resuscitate the industry. According to the study, "Right-Sizing the U.S. Venture Capital Industry," the nonprofit foundation, which studies and encourage entrepreneurship, concluded that there has been stagnating and declining returns in the industry due to a "rapid expansion" of venture capital assets under management. The study, which was authored by Paul Kedrosky, a Senior Fellow at the foundation, concluded that the decrease in venture capital returns predated the economic downturn, are due to the "rapid expansion" of venture capital assets under management in the late 1990's, and are making the segment "uncompetitive" as an asset class.