If you need any more evidence that too much money is chasing too few opportunities, the NYT is reporting that Sevin Rosen is shuttering its 10th fund just as it was prepared to close it. Funds are being returned, at least until the fever breaks:
“The traditional venture model seems to us to be broken,†Steve Dow, a general partner at Sevin Rosen Funds, said in an interview.
Sevin Rosen, a 25-year-old firm that is among the most respected in the industry, was in the process of closing its 10th fund and had received commitments from investors for $250 million to $300 million, Mr. Dow said. But in a letter sent to those investors yesterday, Sevin Rosen said it had decided to abort that process.
“We have decided to take the radical step of returning the commitments you have given us for Fund X,†the firm wrote.
Explaining its decision, Sevin Rosen, which has offices in Dallas and Silicon Valley, said that too much money had flooded the venture business and too many companies were being given financing in every conceivable sector.
The piece reports that other in the industry do not share Sevin’s point of view, but of course these are the opinions of people whose businesses depend on maintaining the impression that VC is a necessary and sensible component of the portfolio. Much debate ahead on this, I hope, and fuel for more coverage of this topic if we hold another mesh.
Update: VentureBeat asks whether the original piece on Sevin Rosen was accurate.