[surfearth]

The majority of funding for the VC industry does not come from the super rich, but rather endowments, pensions, and other forms of institutional capital. These institutions do have many other markets where they invest their capital, most of which are more attractive on a risk-adjusted basis when taking into consideration the illiquid nature of venture capital as well as the high fees.

[dasil003]

You sound like you know a lot more about the VC industry than me, but if what you say is true, why is there still so much VC money flowing?

[nostrademons]

Because there is a lot of money flowing everywhere.

Total VC investment through Q2 2014 is on the order of $22.7B [1], so if this continues, the VC industry is likely to invest about $45B through the year of 2014.

At the same time, the total market cap of the S&P 500 is $17.5 trillion [2], and it's increased by about $2T so far this year [3]. Total daily volume in the S&P 500 is $1.4B [3]; in 3 weeks, more money changes hands in the S&P 500 than it does in 2 quarters for the VC industry.

[1] http://www.nvca.org/index.php?option=com_content&view=articl...

[2] https://www.google.com/search?q=s%26p+500+market+cap

[3] https://www.google.com/finance?q=INDEXSP%3A.INX&ei=2qMcVJCGG...

[mbesto]

VC (the VC money you and I all see on TC every day) is just one asset class of many. In most funds, it usually represents < 10% (correct me if I'm wrong) of the total fund. Since the returns of a few of the funds are consistently giving high returns this 10% might increase over time. But for now, VC is largely regarded as "high risk, high return". Generally speaking, VC and hedge funds are TERRIBLE places to put your money, but funds still put money into them because it spreads their whole portfolio risk.