Sequoia partner says there's too much venture capital and not enough companies to invest in: 'It's a return-free risk'

Core Insights - The venture capital industry is facing significant challenges due to an oversupply of capital and a lack of profitable companies to invest in, leading to the assertion that investing in venture capital is a "return-free risk" [1][5] - Roelof Botha highlighted that the industry requires an unrealistic number of successful exits, citing the need for 40 companies like Figma, which had a $20 billion IPO, to achieve expected returns [2] - The venture capital landscape has seen a decline in exciting IPOs and successful exits, with only an average of 20 companies achieving exits of $1 billion or more annually over the past 20 to 30 years [2][3] Industry Trends - There is a growing concern that investors and startup founders are prioritizing quantity over quality, resulting in a dilution of talent across less interesting ideas and companies [3] - The venture capital sector has experienced a rough year, influenced by economic uncertainty and a scarcity of high-profile IPOs compared to the peak activity in 2021 [3] - Notable exceptions in the current market include significant deals related to AI, such as Google's acquisition of Wiz for $32 billion and OpenAI's $40 billion funding round, which provided some investors with opportunities to achieve better returns [4]