TL;DR - The current VC landscape is more like the 1980s (risk-averse) than the 1990s (bubble). The key lesson of the 1980s is that VCs need to take big risks on new markets to succeed.
Helpfulness - 5
Tags - history, development, early vc
- What was the venture capital landscape like in the 1980s?
- How has it evolved and how is it similar or different relative to today?
- The 1970s saw little venture activity due to a struggling economy.
- In the early 1980s there was a boom in VC investment and IPOs, with higher competition for investments leading to earlier-stage funding by VCs.
- In the late ‘80s VCs began funding later-stage companies and pursuing LBOs rather than seed funding due to poor returns (also shifted from tech to retail etc).
- The internet revived VC in the 1990s.
- Not every cycle is a bubble: ‘90s were, but ‘80s were not (just a lack of risk-taking).
- Today is similar to the 1980s: VCs are not adequately investing in market risk.
Follow up links:
- LBO definition, https://www.investopedia.com/terms/l/leveragedbuyout.asp
- Overview of VC, 1960s-1990s, https://thebhc.org/sites/default/files/beh/BEHprint/v023n2/p0001-p0026.pdf