On the other side, however, there exists one decisive problem. Virtually no Web 2.0 companies have sold stock to the public through ipos. If one desired to deploy substantial capital into the next wave of internet businesses, this would prove almost impossible to do. Even with respect to venture capital and angel investing, the extreme distribution of outcomes imposes a severe challenge on any positive expected returns.
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The Optimistic Thought Experiment | Hoover Institution
The recent glut of angel and superangel money has made people forget this fact: IPOs are only for the irrationally brilliant few, and likely acquisition scenarios are blocked by investors chasing illusionary 10X returns.
Until entrepreneurs can raise $5-10M and have 20-75M exits without being called “failures” by the investment community, the next decade is going to look just as bad as the previous for venture capital.
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