Insightful takes from one of the industry's best. Most surprisingly, Gurley suggests blockchains may be a solution to VC market challenges (and not in the way you may think).

The VC (and all private funds) market is challenged today because of a prolonged period of near 0% interest rates, regulation, and cost of going public has hampered liquidity.

Private companies are staying private longer. That's a bad thing. It stymies capital allocation, access, and undermines our capital markets.

Compounding problems are arising: i) Higher rates now means higher cost of capital plus longer holds means a company needs to be worth even more in 5 years time. Eg a $100 payout today equates to $250 payout in 5 yrs at 20% cost of capital. ii) Large public investors are incentivized to keep companies private longer. These investors get larger allocations in private markets vs IPOs. Access to these private companies becomes a marketing angle to raise LP money. iii) Large funds are lowering their minimum investment amounts and lobbying to be included in 401ks. This all makes matters worse.

Gurley notes that blockchains are a potential solution. Tokenizing securities on chain enables private companies to access 'public' markets far easier and cheaper. SEC under Hester Perice is exploring how to do this. And it's needed.

US capitalism has thrived in part because of our liquid capital markets. We need to re-inject them with liquidity, simple listing processes, and make them more accessible. Blockchains can help. They can make US capital markets great again.