Assertion certainty 4/5 debate potential 4/5

Venture capital performance persistence is a myth due to high fund churn

Alex Bangash · 20VC: Why The Whole Industry Is Backward Looking, The Best Funds Are Entrepreneur Led and Venture Is All About Access with Alex Bangash, Founder @ Trusted Insight · Jul 20, 2016 · at 5:15

Alex Bangash, founder of Trusted Insight, argues against the traditional LP assumption that top VC brands consistently outperform over long horizons.

0:00 / 0:16exact quote · 16.9s
720p mp4 · rendered on demand · StarZero watermark
“So for all this talk of we see being increasingly persistent the reality is it's not. And the reality is that there is a huge churn in venture capital.”

quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →

More from Alex Bangash

Insight
Underperforming VCs survive by continually raising capital from lower-tier LPs
“Amongst the established managers, if you are a traditional quote-unquote VC not an incubator, accelerator, post-accelerator, what is, what's actually happening is that there is always this theory of a bigger fool. So what happens to them is that they might not…”
Alex Bangash Jul 20, 2016 ▶ 13:34 20VC: Why The Whole Industry Is Backward Looking, The Best Funds Are Entrepreneur Led and Venture Is All About Access with Alex Bangash, Founder @ Trusted Insight
Assertion Partly supported
Four of the top 10 Midas VCs lacked firms 10 years ago
“Four out of the top 10 VCs, Steve Anderson, Chris Saka, Josh Copeland, Peter Thiel, In that they didn't have firms 10 years ago, right?”
Alex Bangash Jul 20, 2016 ▶ 4:51 20VC: Why The Whole Industry Is Backward Looking, The Best Funds Are Entrepreneur Led and Venture Is All About Access with Alex Bangash, Founder @ Trusted Insight
Insight
Venture capital is inverted because entrepreneurs select their fund managers
“Today, the entrepreneurs are picking the managers. This is in stark contrast to any other asset class. So in any other asset class, you can look at a great manager and you can assess their ability to pick securities. Ok, so it's a security selection. So ventur…”
Alex Bangash Jul 20, 2016 ▶ 7:47 20VC: Why The Whole Industry Is Backward Looking, The Best Funds Are Entrepreneur Led and Venture Is All About Access with Alex Bangash, Founder @ Trusted Insight
Assertion Supported
Half to two-thirds of venture capital managers lose money
“In most asset classes, a third to a quarter of managers lose money. In venture, that, that could be, depending on the vintage, that could be half, two-thirds of the managers.”
Alex Bangash Jul 20, 2016 ▶ 11:17 20VC: Why The Whole Industry Is Backward Looking, The Best Funds Are Entrepreneur Led and Venture Is All About Access with Alex Bangash, Founder @ Trusted Insight
Prediction Not checkable as stated
AngelList-style platforms will become some of the top venture managers
“So we think some of the best managers, which I will actually be platforms like AngelList.”
Alex Bangash Jul 20, 2016 ▶ 11:38 20VC: Why The Whole Industry Is Backward Looking, The Best Funds Are Entrepreneur Led and Venture Is All About Access with Alex Bangash, Founder @ Trusted Insight
Assertion Not checkable as stated
Baseline venture capital return expectations have dropped from 3-5x to 2x net
“The return expectation of venture used to be three to five X and above, and now there are folks in the industry that are perfectly fine with a two X net return because internally their return expectations are much, much lower.”
Alex Bangash Jul 20, 2016 ▶ 14:30 20VC: Why The Whole Industry Is Backward Looking, The Best Funds Are Entrepreneur Led and Venture Is All About Access with Alex Bangash, Founder @ Trusted Insight
Made with StarZero

Turn any episode into a week of clips.

This entire site, over 1,200 episodes transcribed, diarized, checked and made playable, runs on the StarZero media pipeline. Drop in your own episode and the podcast clipper finds the moments worth sharing, cuts them, captions them, and reframes them for every feed.