Just read a good article in BusinessWeek titled "Super Angels Shake Up Venture Capital" about how new, smaller venture capital funds are filling the gap in early-stage venture funding. The article focuses on Josh Kopelman's First Round Capital. The "super-angels" are basically just early-stage venture funds that are near or under $100 million. Kopelman argues that the economics of large venture funds ($1 billion+) aren't sustainable, particularly in this economy. Most of these funds need to return 3x in three years (for a 20% annual return). With a $1 billion fund, that means you need your investments to have exits in excess of $15 billion (assuming you're invested at 20%). Given there are no IPO's these days, it's tough to have those kinds of exits. Makes sense I suppose for investments that don't need much capital to get going (IT, web, etc.). But it seems the mega-funds still have their place. To get an alternative energy start-up off the ground, for example, takes hundreds of millions of dollars. The exits might be further out, but they'll likely be bigger.
Read an interesting article a couple weeks back in the WSJ on how biofuels may actually increase carbon emissions in the medium to long-term. Apprently the shifts in land-use necessary to support the production of bio-materials like soybeans, corn, or palm could in fact release more carbon emissions. The time it takes to get carbon-neutral on some of these projects is pretty crazy - 319 years for soybean biodiesel from Brazil (assuming you're clearing rainforest), 93 years for corn ethanol from the U.S. (assuming you're clearing grasslands), 86 years for palm biodiesel from Indonesia (assuming you're clearing rainforest). I suppose biofuels really aren't meant to reduce carbon emissions, but just crazy that they potentially exacerbate the problem so much.
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