The National Venture Capital Association is reporting for example, that the number of active VC firms has dropped from a 2007 high of 1,019 to 882, and that 15% of all venture-capital principals—the guys who decide whether to invest in start-ups—have left the industry since that time.
The exodus has impacted a stunning array of well known firms and partners. Sequoia Capital, the beast of Menlo Park, which has the pelts of Google, eBay, Cisco and other high flyers on its mantlepiece, has said good-bye to Pierre Lamond, Michael Beckwith and Eric Upin, for example.
Venrock’s managing partner Tony Sun has decided to accept a gold watch, as has Shanda Bahles, a stalwart for 20+ years over at El Dorado Ventures.
Boston-based Atlas Venture Partners has let go at least 6 investment partners in 3 years. The recent departures were triggered by the firm’s decision to close a new fund at $280 million, well short of its $400 million fund-raising target. Atlas also closed offices in Munich and Paris and Munich last year.
Advanced Technology Ventures, Atlas Venture, VantagePoint and the Foundry Group have also shed partners, according to the Wall Street Journal.
“About once a week, a general partner leaves or a venture fund closes,” Jim Watson the managing general partner of CMEA Capital told the Journal.
The cause of the problem has been a freefall in IPOs and acquisitions involving companies in which the VCs have invested. In 2008, VC funds invested $29.7 billion into young companies but generated only $24.9 billion in revenues, according to VentureSource.