Ball: Mega-funds incentivize VCs to prioritize deploying capital over founder success
Jamin Ball · Ep19. State of Venture, AI Scaling, Elections | BG2 w/ Bill Gurley, Brad Gerstner, & Jamin Ball · Bg2 Pod · Oct 31, 2024 · at 10:31
Jamin Ball discusses his 'Clouded Judgement' newsletter post analyzing how management fees on multi-billion dollar venture funds detach investor wealth from startup outcomes.
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“And so now there's a path where investors, GPs get rich, where the outcome of the founders and their companies is irrelevant. Not to say they are aligned in opposite directions, but they're no longer aligned. And now, as a rational actor, you could say, why not maximize the guaranteed portion of the comp, the two percent, versus caring about the 20%. And that leads to some pervasive incentives where funds incentives are more about deploying dollars quickly as opposed to maximizing the value of those deployed dollars.”
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