It is part of the psychology of “is it 1995 again” that many people immediately jump to 1999, the memories of the last bubble still fresh in mind. Can we go from 1994 to 1999 without those years in the middle?  Last weekend the WSJ laid the issue to rest.

We are not like 1999 in one huge respect: money is leaving venture capital, not rushing in. This is not a general bubble but a narrow-based boom, with VC fundraising still very challenging, leading to haves and have-nots in the VC world. Put simply, the money rushing into SuperAngel funds, and into the branded VC firms with later-stage SuperAngel-style deals, is much less than the money leaving venture capital as an asset class. Until that reverses, 1999 is not here.

In the late 1990s, investors were piling money into VC firms. This time, especially because they use 10-year returns to allocate capital, capital is still leaving the venture world, not rushing into it. VC ten year returns are poor compared with other asset classes. (The technical term is that VC ten-year returns have sucked, big time.) This actually bodes very well for future VC returns, as less money chasing these funds should make the brave & the few still moving into VC very successful.

I discussed this with Rory O’Driscoll of Scale Ventures (formerly Bank of America Ventures). Rory is one of the great thinkers in this industry. He does his homework and respects numbers, as you can see from his blog VC Matters. He constructed the following chart, which shows how VC returns do best when VC finds are on a diet, and he expects future returns to rise:

Curiously, no one has yet named this era. I call it the Social/Mobile/Web, and while the social web has dominated to date, the mobile side is shaping up to be huge. Mary Meeker was one of the great analysts of the dot-com bubble, and now she is at Kleiner Perkins, dong what she does best. Her latest work shows how the next decade will be shaped by the new face of mobile. From her point of view, it is 1996 all over again.