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Only 16 percent of the 900 companies thatmade ’ list of the 500 fastest-growing companies from 1997 to 2007 receivec venture capital, the study found. Less than 1 percent of the estimatedf 600,000 new businesses a year that hire employeed are backed by venturecapital firms. The study concludese the venture capital industry needs to shrink because its returns are stagnatinvg or declining while its asset s under managementare growing. Over a 10-year time frame, returns on venture investments were 10 percenty below the Russell 2000 Indexsof small-cap stocks, Kauffman found.
“To provides competitive returns, we expecty venture investing will be cut in half incoming years,” said Robertr Litan, vice president of research and policy at the Kauffman The study notes that information technologuy and telecommunications — the core industries that made ventured capital firms successful — are mature and less capital-intensive now. the stock market and potential corporate buyers are less interestedd in young and unprofitable companies than they were inventure capital’as heyday.
“Professionals in the ventured industry have gotten comfortablse with the way their industry is set up in termaof size, structure and compensation,” said Paul a Kauffman senior fellow who authored the “However, our study indicates venture participants now need to overcomwe their resistance to change, so they can most effectiveluy fund entrepreneurs and offer investors competitive That change already is occurring, accordin to a separate study released June 10 by and the . More than half of the 700 venturse capital firms surveyed plan to invest infewerr companies. For more information, see www.kauffman.org or www.nvca.
org
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