This weekend a gold-plated venture capital firm decided to not take committed money ($250-300 million) from LPs for its 10th fund. Sevin Rosen Funds argued that the times of Venture Capital are - for now - over. Too much money and too few exits around was what they claimed as the reason.
Of course others are saying that SR's formerly successful people (Compaq, Lotus, Cypress Semiconductor) have mostly left and others will soon pop up with other VC firms.
But then there are rumours also that this could be just the start of many other VC firms following suit.
Whatever the case, I think one problem most US VC funds have is that they only invest in a limited geographical area. Only a few exceptions look further than a thirty mile radius around San Jose, plus a few other locations in the US. Ok, they are all looking at India and China (mostly India as a low cost software development location and China for some local companies). Europe is on the other hand practically not on their radar screen. Most VCs in the US have no clue how the European markets work, and often all they know is that stiff bureaucracy and labour laws would not allow them to do business here. That is entirely wrong though, in my opinion. Of course working here requires some changes in the way you plan for failure, but from what I have seen you also get much further than in the US with much less money.
So whatever is happening, we will see VCs survive and raise more money while others let things run out or go into a gliding mode. There is no alternative to that, unless once again 20 or so VCs are to risk putting $50million each in e.g. Metro DWDM startups when the market size and growth might not let even one survive. That's what happened back in 2000.
