More on the Overhang issue

Jim Breyer on the "overhang" problem -

His group predicts that between 2004 and 2006 the industry will see a 20 percent annual decline both in the number of VCs and venture firms. That would mean that within three years the VC census would return to roughly where it was in 1997. "We're going to see a lot of firms unable to raise a next fund, track record really does matter in this business."

Article gives all the reasons why there is so much money out there (though lot of that is un-invested ) - along with their traditional LP base which is university endowments and large pension funds, third large base of wealthy individuals, also joined this party right around the boom time in good number. Along with the overall increase in percentage allotted to private equity investments by large pension fund managers.

As Bill Tai warned couple of days back that something doesn't add up here. There are lot of deadwood startups out there in their series-D/E stage. There is going to be a correction down the road. Its quite ironic to see how lot of companies with struggling business plans are extending their lifeline by outsourcing most of their operations to India and China.