Does the U.S. economy suffer from a venture capital shortage, or is there too much VC money being invested in startups?

During a recent interview with Inc.Techstars co-founder David Cohen explained why the startup community will probably never reach a consensus on this issue.

"There will always be a capital shortage from the perspective of entrepreneurs," Cohen says. "They used to call it the 'Series B crunch,' and then seed funding was rare and there weren't enough angels."

While some people might point to the fact that it's common for venture-backed companies to flounder as evidence that there is too much VC funding going around, Cohen doesn't buy that argument either.

"We need that activity at the top of the funnel to really have the biggest amount of innovation at the bottom," he says, adding that there is plenty of capital to go around. 

Though Techstars makes a $120,000 seed investment in every company accepted to its accelerator program, for Cohen, the real benefit of Techstars is the network of entrepreneurs and mentors that new startup founders can learn from--not the seed funding. 

To hear more from the conversation, watch the video below. 

Published on: Apr 6, 2015