The tech staff at FORTUNE recently published a blog article about the long-term prospects of the venture capital industry.
Indeed, the venture capital industry is currently facing pressures (potential higher taxes on gains, competition from angel investors because of startup’s reduced capital needs, etc.). But these headwinds are temporary obstacles rather than the beginning of the end of the venture capital industry. My hypothesis derives from my infatuation with the Solow Growth model which was pounded into my head by various professors of economics before law school.
In Solow, technology plays a gigantic role in long-term economic growth and I just can’t imagine venture capital, being such a facilitator of technology, getting the permanent squeeze.