Sequoia Capital's Mike Moritz, the uber-VC who earned his reputation backing Google, Yahoo, eBay, Cisco and Apple, was pessimistic about the future of the venture capital industry at a Fortune-sponsored conference Friday. "People would be far better off investing in an index fund," rather than putting their money into a VC fund, Moritz claimed, estimating that fewer than 20% of VC funds outperform the S&P 500.
That goes a long way towards explaining the low regard that many entrepreneurs have for VCs (privately, of course). The venture business has been having a hard time in the tech sector lately, forced to compete with angel investors for smaller deals ($1 or $2 million instead of $10 or $20 million) and making up the difference by funding dozens of early-stage startups where before they'd invest in just a handful of later-stage companies.
Will the VC business still exist in 10 years?
More comments from Moritz at the same Fortune event: Michael Moritz compares venture capital to bird spotting
