Underperforming VCs survive by continually raising capital from lower-tier LPs
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 13:34
Alex Bangash, founder of LP network Trusted Insight, explains how established venture fund managers who fail to generate top returns continue to raise new funds by finding new LP categories.
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“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 be smashing it, but then, but because they're established, they are in the palette of managers from which People choose. So they might do some investors, but another set of investors, another, a different type of institutional investors, you know, they might have endowments and foundations. They move to pensions and insurance companies. They might have pensions and insurance companies. They might go to European investors. They might lose their European investors. They go to Middle Eastern investors. So there's always somebody else.”
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