Small is Beautiful (Bill Reichert - Garage Technology Ventures)

This article hits the nail on the head. Bill’s assessment of the current state of venture capital investing and venture capital as an asset class is spot on.

Bigger is not better. Early stage investing historically has generated the highest returns, but the current generation of larger funds is allocating a smaller percentage of their funds to true early stage companies. Investors interested in generating disproportionate returns need to understand the new math of venture capital: Small is Beautiful.

There is a substantial population of companies with the potential for high growth and high profitability, but with likely exits in the $50 million to $100 million range. Some of these companies are in the traditional tech centers—Silicon Valley, Boston, Southern California. But there are also some brilliant entrepreneurs and great investment opportunities off the beaten path—in Denver, Portland, Chicago and Calgary. These companies don’t need $10 million to get off the ground; most of them only need $2 to $4 million.