Deven Parekh argues return-optimizing VCs should focus time on middle-tier companies
Deven Parekh · 20VC: Insight Managing Director, Deven Parekh on The Current Funding Mania, Compression of Round Timelines, Fund Deployment Speeds Increasing & How To Think Through Price and Time Allocation Across the Portfolio · May 17, 2021 · at 25:03
Deven Parekh, Managing Director at Insight Partners, discusses portfolio management frameworks and how theoretical time optimization contrasts with practical VC behavior.
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“If you said, I'm a robot, and I'm going to allocate my time in a way that totally optimizes fund returns. Actually, you spend almost no time with the winners. The market's great. The management's great. You're a cheerleader. You're not adding as much value as you think you are. The middle, you actually probably can influence the outcome. Maybe it requires making some changes in the strategy. Maybe it requires upgrading the management team, but there's probably ways that you can influence that outcome. So spending some meaningful time in the middle actually makes sense. And then spending almost no time on the capital returners or the losers. That's how an optimized machine would spend their time.”
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