A prominent American venture capitalist recently declared the VC industry "over," arguing that fund managers have become more focused on generating fees than building future companies. The Silicon Valley investment model that dominated for decades is facing mounting criticism for prioritizing short-term returns over genuine innovation.

The criticism comes amid a significant funding contraction. European startups saw venture investment plunge to €33.3 billion in 2023 from €83.7 billion the previous year—a 60% decline that exposed the fragility of the boom-era model. Global VC activity similarly collapsed, with total deal value dropping roughly 20% as investors pulled back from riskier bets.

Industry veterans argue the model has strayed from its founding purpose. Rather than identifying and nurturing transformative businesses, many funds have evolved into fee-generating machines that chase momentum deals. Whether the sector can reform itself—or whether a new approach emerges to replace it—remains the central question facing startup ecosystems worldwide.