Venture capital differs from traditional finance by only targeting tail events
Sebastian Mallaby · Sebastian Mallaby – The Making of the New Future in Venture, Venture is Eating the Investment World 14 (Capital Allocators, EP.245) · Apr 11, 2022 · at 8:01
Financial historian Sebastian Mallaby explains to Ted Seides why he categorizes venture capital as 'anti-finance' compared to traditional public market investing.
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“Rather than being accused of ignoring tail events, as people in public markets are sometimes accused, these people at venture capital partnerships only care about tail events. It's all about that extreme disruptive, 10 X, 20 X Outlier. And the middle of the distribution in a venture capital portfolio is pretty much a loss. It's a startup that goes to zero because that's what the majority do.”
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