You can get whiplash watching the venture capital industry. Annual U.S. VC investments rocketed from under $10 billion in the early 1990s to over $100 billion in 2000, then plunged back toward earth when the bubble burst. It’s not going to be a soft landing. With annual investments now well below $25 billion, our projections show that a gradual shakeout is likely—one that in the worst case could force up to half of all current VC firms to close shop over the next several years.
A version of this article appeared in the July 2003 issue of Harvard Business Review.
