A View On Investing

Fred Wilson over at AVC recounts an experience from being on a panel of VCs over in Europe a few weeks ago.  The basic gist is that the state of the public markets has little if any effect on entrepreneurial value creation.  An interesting nugget from Fred’s post:

Eric Archambeau of Wellington Partners was on the panel and he described some research work he and some associates did a while back. They went back to the 1970s and charted for each year through the late 1990s the number of venture backed companies started that year and the number of $1bn revenue companies and $500mm to $1bn revenue companies that emerged in each ‘vintage year’. The result of that work, he explained, was that the number in each category was relatively constant year after year with no discernable pattern and certainly not correlated with or against market or economic cycles. Interestingly, the data was not correlated with innovation and technology cycles either

However, the implied assumption is that the ‘model’ is linear and we’re in such uncharted water that I’m not sure that’s true.  You know how when you’re benchmarking public equities the data sets always leave out performance from the 1929 crash and most of the following decade?  It’s more likely than not we’re in a similarly non-linear time…