Venture capital returns

The hilariously named and always good to read Felix Salmon has a great post on How venture capital is broken.

Here's a picture of Felix's face.

This is one of those times where I could summarise his post, but it's really good anyway and already summarises a larger report.  Basically, he's got data for venture capital returns (which there was very limited data on before) showing that there aren't insanely high returns to limited partners (ie, investors).  In fact, the marginal investor is earning a negative return, and probably has been since about 1995.  

I like this because I once sat in a meeting with a senior government official who glibly told the 8 or so attendees that "what happens is off shore private equity [of which venture capital is a subset] borrows overseas at 4%, and invests here earning 25%, and leverages up even more to make three digit returns".  I didn't even know what to say and so said nothing.  (I could have said this, or this, but no one else seemed shocked so I just blinked as loudly as possible).

I like confirmation of the fact that he was almost certainly wrong, and had probably been to too many meetings with people like this.