The Ledger
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Venture capital performance persistence is a myth due to high fund churn
“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.”
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…”
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?”
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…”
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.”
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.”
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.”
Series A funding has become the fourth or fifth institutional round
“So almost the series A has become the fourth or fifth institutional round.”
Over 90 percent of venture capital avoids true early-stage deals
“There was close to forty billion raised last year, 14, fifteen billion in Q-one. 90%, 90 to 95% of that Is not going into true early stage.”
Top-performing small venture capital funds should target 5x to 10x net returns
“My thinking is that if a smaller fund is worthy to be invested in they should have a shot at five to 10 X.”
Institutional LPs struggle to identify disruptive entrepreneur-led VC funds early
“The entrepreneur-led models, which, by the way, tend to do, you know the most of, the most disruptive new models are very hard for institutional investors to identify.”
Artificial intelligence is as fundamentally disruptive as the early web
“And the next big wave, as we talked about, AI is, Is almost as fundamentally disruptive as the web was.”
Small VC funds succeed by avoiding direct competition with Tier-1 firms
“The nice thing I like about some of these small funds is that they don't compete in their sector, in their geography, in their states. They don't compete with Sequoia and Excel, benchmark, and increase. So they are dominant. They will never lose to them becaus…”