Venture Capital

Suresh K. Sharma and Karl E. Meyer
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Suresh K. Sharma: Georgia Institute of Technology
Karl E. Meyer: Open Range Capital Partners

Chapter Chapter 4 in Industrializing Innovation-the Next Revolution, 2019, pp 37-48 from Springer

Abstract: Abstract Venture capital access and investment models are inefficient, and they are due for their own innovation. In this chapter we discuss the primary drivers for failures and successes in existing venture investment models. We show how the models of existing Venture Capitalist firms have gradually lost focus on longer-term value to become short-term investment vehicles instead of creating significantly higher value for society. The focus on quick Return on Investment (ROI) have distorted the overall culture of venture capital. Even with their shockingly high failure rates and poor performance these models survived until now. Inefficiencies of capital deployment and value creation - across the complete investment cycle, from deal sourcing to exit - need to be thoroughly investigated and corrective measures put in place. In good times the investors generally receive the promised returns from Venture Capital firms, but what was left on the table was neither questioned nor properly analyzed. We examine the continuing evolution of the industry thus far and discuss its unsustainable trajectory. We discuss the failure to use knowledge from multiple sources to de-risk. We begin to explore new investment models to enable industrialization of innovation that could easily be a win-win for all stakeholders.

Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-12430-4_4

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DOI: 10.1007/978-3-030-12430-4_4

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