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The VC Model Is Broken

Matt Marshall

These days, the more you talk to folks about Silicon Valley’s venture capital industry, the more negative the message is becoming. And for good reason. There’s no more patience. Last time, circa 2001, the entire VC industry got a “get-out-jail-free card” after the Internet bubble burst. That’s because the scores of new firms created in the late 1990s argued they should be forgiven for any poor performance–it was the bubble’s fault, and everyone was affected. Their investors–chief among them, the elite university endowments–agreed, and gave the VC firms more money to invest again. With most VC funds lasting for 10 years, this ensured the VCs a very long life indeed.

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