Is Venture Capital Broken?

Sean Parker, the entrepreneur behind Napster and Facebook now turned investor, was talking about the state of the venture capital industry last week when he said: “There’s too much money chasing too few deals.” At 30, Mr. Parker, who was recently portrayed by Justin Timberlake in “The Social Network,” has been thinking a lot about innovation—or the lack of it — in the United States. And he’s come to a depressing conclusion about the money industry that he says used to be “the engine of innovation” for this country. “The risk-reward doesn’t work out in favor of putting money into venture capital anymore,” he said.