The Real VCs of Silicon Valley?

Venturebeat reports that Foundation Capital has raised a $750 Million new fund. The firm’s last fund was $525 million, closed two years ago. Goes back to my question: Who are the real VCs of Silicon Valley? How can you practice true venture capital if you have to put so much money to work?

Don Dodge provides the statistics: “The Center for Venture Research at UNH today released their annual Angel Capital report for 2007. Angels invested $26 Billion in 57,120 companies, up slightly from last year. The report says there are 258,200 active angel investors in the USA. By comparison, Venture Capitalists invested to $29.4B in 3,813 companies in 2007.”

The Real VCs of Silicon Valley, thus, are the Angels.

What I find disconcerting is that some of the best early stage venture firms are basically putting themselves in a situation whereby they cannot do early stage anymore!

Tom Foremski weighs in at SiliconValleyWatcher with Angels are the Real VCs and Out & About: Entrepreneurs Talking About Recession- Are Angel Investors In Trouble?

Paul Kedrosky starts typing without reading first, The Myth of the Angel Investor : “The real problem isn’t in Series A, it’s what happening with so-called angel investors.” – Right. I have been frothing in my mouth talking about this problem for a while.

“In the same way that true entrepreneurs are often celebrated and seldom seen, true angels are often talked about but rarely seen writing gut checks. Many of them are echo-bubble babies, now pulling in their horns in the recent stock market carnage; others are moving up-market, especially in oxymoronic “angel investing associations”. Granted, sometimes such things have a purpose, but, as one entrepreneur-turned-investor put it to me recently, I became an entrepreneur/investor to avoid having to be a member of anything. Why would I start now?”

Well, Paul, ask a few Angels who have seen the worst of dilutions and wash-outs … they’ll tell you why being part of a “fund” that can protect the dilution may be a better bet than that $250k they just saw disappearing into wash-out land.