Bill Gross, the legendary bond fund manager at PIMCO, has been writing for a few years now about the new normal of global finance and the implications for investing and investing strategies going forward. I recently came across this awesome guest post by George Zachary of Charles River Ventures on the Venture Hacks blog – and it struck me as describing the new normal of venture investing and as a result of venture-backed startups.
It is a must-read for any entrepreneur operating in VC-backed startup land as well as for anyone in venture capital.
In particular, I noted this chart below which was included in the post. The data on this chart make a pretty clear case that cheap money is not only gone, but it will not be around for a long time. The dynamics of capital have changed, and we are entering a new normal phase for the foreseeable future.
Lastly, note the first commenter in this post as well … the good news, in my opinion, is that innovation will not stop, and cloud-computing, mobile technology, smart-grid, clean-tech and others will continue to add value and generate strong returns and new market leaders. Remember, the 1966-1981 period of prior negative aggregate speculative returns was also a period of time that produced such market leaders as Apple, Microsoft, Oracle, Genentech and others. We are indeed back to fundamentals.