From the Editor: Of Bonds and Board Games –

Sometimes really important stories get little press. Most often it’s because they’re not simple. They need time to explain and a writer who really understands the subject matter. That’s why it’s unlikely that you’ll see our top News Analysis story anyplace but here. The general idea is to make investments in venture funds and then secure those investments with bonds that are insured. Voila! Now a whole lot of people who couldn’t participate in private equity have a way in.

Pearl Street’s gambit is part of a larger effort to institutionalize private equity and open it up to a mass audience. This is good news for a venture community staring at one of the bleakest fund-raising environments in years.

While we’re on the topic of the future of venture capital, I want to be sure to point out our Cover Story. It presents a great existential question for venture capitalists: “Why are you here?” Does it really matter if you invest in a sandwich shop-as opposed to a company that makes a product that improves the lives of millions of people-as long as you’re generating fat returns for your LPs?

Before you answer that question, consider the fact that so many firms that say they focus on early-stage technology deals in reality don’t. We haven’t seen a great deal of independent thinking about where to make new technology investments. Look no further than the sad number of Series A deals done in the first quarter (see “The Near Death of Early-Stage Investing,” page 4). Too many VCs continue to practice bandwagon investing. Can you say Wi-Fi?

Maybe it’s better for venture capitalists to drop the pretense and say: “Yeah, it’s about the money. It’s always been about the money, you nave little twit.” Then, at least, they won’t feel any guilt about investing in new dishwashing liquids, sandwich shops, hair-cutting salons and board games.