I don't disagree with you. If I were CALPERS and needed to throw around money $5 billion at a time for it to be worthwhile, I might avoid VC entirely. My point is more about what it says about the industry as a whole. Total Silicon Valley VC investment is in the neighborhood of $11-12 billion/year. If the rate of return on that relatively small investment is, on the whole, less than the S&P 500, then that really calls into question the whole narrative about how much economic value is really being generated from VC-funded startups. Blue-chip companies might not be able to yield Facebook-like returns, but they can apparently yield VC fund-like returns, and do so while absorbing far more capital.

I'd like to see the IPO market re-open, and companies IPO around when they'd be doing large Series B today, or certainly anything after a B.

Seed and maybe A are not capital intensive, and are probably constrained by great ideas, founding teams, and early entrepreneurial employees. But I don't think VC is the right way to finance lower risk later stage stuff; the public markets could do a good job, and it would be a lot easier for risk-seeking investors (individuals or institutions) to get in and out of investments vs. being LPs in funds, and with lower overhead.

I don't think any analysis of post-SarBox VC returns can be useful without examining the effects of the closing of the IPO exit. Sure, a very few, very exceptional companies can take this route, but it has otherwise been shut after a good 4 decade or so run.

In addition to lowering returns, it unfairly prevents smart but non-rich individual investors from investing in awesome opportunities like Tesla or SpaceX in 2008.

Hmmm? The Dodd-Frank Act as of July 21, 2010 excluded an accredited investor's primary residence in counting their wealth (although for many I'm sure that was closing the barn door after the house's value plummeted), but I don't remember anything like that in SarBox (the accredited investor restriction goes back to 1933, thank you FDR).

I meant that SarBox defers IPOs until stupidly late, so "normal" investors, reliant on the protections of the public market, don't get to invest early enough to make real money.

I'd adver that "stupidly late" really is now "never", with rare exceptions that prove the rule like Facebook---which was mispriced but otherwise doesn't deserve its bad reputation (their IPO, not the company), and that's going to further dampen tech IPOs going forward for some time. Why was it mispriced??

Turn it around, to cash out, is your objective an IPO or acquisition by another company?

Further, the sharp decrease in VC returns means less in the pockets of founders and early employees, and therefore less smart money in the game. Heck, you mentioned Elon Musk's Tesla and SpaceX, his money to get them going comes from PayPal, which was bought by eBay in 2002 (by then it was already getting very bad---granted, that was when the dot.com and post/911 crash was playing out---but SarBox is generally viewed as the last nail in the coffin).

Yes. I suspect the next 5-10 years will see one of:

1) Big non-US market growing up (probably in Asia, but possibly in cypherspace), with more rational regulations

2) Massive slowdown in tech progress (which one might argue is underway, but not as obvious; if it accelerates, it will be obvious)

3) Some way for PE to take over from public markets. Content to sit on revenue-generating companies throwing off cash. This already seems to be happening; I'm not sure what the tax consequences are, but I suspect they're smart/powerful enough to either financial engineer or politically engineer a solution.

All of them suck for different seasons. #2 is probably the worst for me personally.