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Ships in the night

When times are bad, fingerpointing can be a comforting exercise. In today's bear market, we get the sense that there are some hard feelings and frustration directed from institutional investors to the venture community. The latter continue to do well - and the fact that they continue to raise new venture funds indicates they see a rosy future for their returns. Meanwhile, institutional investors have watched their $12 IPOs and $20 or $30 secondaries plummet to $3 or $4 or $5.

While it's easy to accuse the venture community of bumping up valuations so that public market investors can't make a return, we've pointed out in other contexts that nobody holds a gun to investors' heads and forces them to put their money into a stock. If they didn't like the starting prices they shouldn't have gotten in, and if their stocks had a good run, they should have gotten out.

But bull and bear markets aside, there are some new perceptions this time around that are worth thinking about, namely that the public markets really have been asked to engage in venture investing.

That has two implications. Most obvious is that public offerings should be done at venture-type prices offering the potential for venture-type returns.

Less clear is the question of whether there should be more interaction between early- and late-stage investors, based on the notion that they're all in it together as venture investors and that more dialog would help ensure a smooth flow of funds by making it easier for people to make money every step of the way.

The irony

The problem, of course, is that developing these companies

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