Venture Capitalists are much less ambitious than their private equity siblings(summation.net)
summation.net
Venture Capitalists are much less ambitious than their private equity siblings
https://summation.net/2019/01/21/venture-capitalists-are-much-less-ambitious-than-their-private-equity-siblings/
6 comments
While some of this is overstated, directionally it is on point, but he ignores one very important factor: the customers. The LPs that provide most of the capital to the VCs (pension funds and endowments) expect and want a certain product (2/20 funds run as partnerships, where each investment is attributed to one of the partners). Business models that deviate from this are not received well.
[deleted]
This is a good read https://www.amazon.com/Buyout-America-Private-Destroying-Ame...
So they take less risk so the startups they fund can take more. No surprises here?
enkiv2(1)
There is one more point I would add to the list. VC's seek high volatility experiments because the power law approach to investing means their wins have to be massive rather than just double or triple their money. VC's themselves use a portfolio to dampen volatility. Peter Thiel is on record that most VC's think about it all wrong and should just admit to making huge bets.
Rob Hayes, of First Round Capital, once said that VC's sell a product (money) to customers (entrepreneurs). This would make LPs their suppliers. If so, then having a family office, or other patient capital, back your fund would be a huge advantage.