TLDR:
- VC investments in high-risk technology have led to major flops such as WeWork and FTX.
- VC sector is struggling to raise funds as IPO market dries up, leading to doubts about the industry’s future.
In a scathing article, Andrew Orlowski argues that to save capitalism, it’s crucial to get rid of venture capitalists. He highlights the failures of high-risk technology investments, including the collapse of WeWork and FTX, as examples of the industry’s shortcomings. Orlowski points out that while venture capitalists were once heralded as masters of the universe, recent missteps have tarnished their reputation and raised questions about the necessity of the industry.
The article highlights the decline in VC funding, with Pitchbook Venture Monitor reporting a significant drop in funds raised in 2023. This, coupled with the drying up of the IPO market, has led to predictions that half of VC firms may disappear within the next four years. The focus on high-risk technology investments, which Orlowski refers to as the “ensh-ttification” of technology, has led many to question the value of the industry as a whole.
Despite the skepticism surrounding venture capitalists, the article notes the rise of interest in AI technology. However, only a handful of large companies, such as Microsoft, Amazon, and Google, have been able to capitalize on AI’s potential. This has led to doubts about whether there will be an AI gold rush for investors.
Overall, Orlowski argues that for venture capitalism to survive, it needs a new breed of capitalists who are dedicated to creating value and growth, rather than focusing on the high-risk, high-reward ventures that have characterized the industry in recent years.
