The best thing for the venture industry would be for the IPO window to remain closed for another two years. Maybe then enough carpetbagger VCs will have given up and taken high-paying jobs in large corporations. As you’ll read in this month’s cover story, “Compensation Blues,” people who got into the venture business solely for the money are starting to think twice about their career choice. They’re grousing that their base salaries should be higher because there haven’t been any exits to produce carried interest. Boo hoo.
Jeff Bussgang, a GP with IDG Ventures Boston, surveyed about 40 VCs who have been in the venture business for six to 10 years and found the majority had never received a carry check. That is problematic, says Bussgang, because “if they’re only working for salary, then another VC fund that offers them a bigger salary can poach them away.”
It seems to me that if a VC wants to leave a fund for a bigger salary, then he or she really isn’t in the business for the right reason. That person would probably be happier working for a leveraged buyout fund. VC has never been about short-term profits. True VCs don’t worry about exits, because they know that the exits will happen down the road if they do their job correctly—that is, build a successful company.
Says Scott Irwin of El Dorado Ventures: “Some people will always think short-term and go where they can maximize their salary, but most people in venture realize this is a get-rich-slow business.”
Amen to that.