
Venture Capitalists are much less ambitious than their private equity siblings - telotortium
https://summation.net/2019/01/21/venture-capitalists-are-much-less-ambitious-than-their-private-equity-siblings/
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robterrin
This article is well reasoned. I have heard VC's lament that they are
constrained by the business model, and one of the world's foremost academics
studying PE/VC believes the model is broken. Limited partners (LP's) have a
required rate of return based on actuarial statistics that pension funds must
meet, spending goals for foundations or building plans of endowments. All
problems stem from having to hit their investors' goals while investing in
uncertainty (different than risk, which is what private equity does).

There is one more point I would add to the list. VC's seek high volatility
experiments because the power law approach to investing means their wins have
to be massive rather than just double or triple their money. VC's themselves
use a portfolio to dampen volatility. Peter Thiel is on record that most VC's
think about it all wrong and should just admit to making huge bets.

Rob Hayes, of First Round Capital, once said that VC's sell a product (money)
to customers (entrepreneurs). This would make LPs their suppliers. If so, then
having a family office, or other patient capital, back your fund would be a
huge advantage.

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pge
While some of this is overstated, directionally it is on point, but he ignores
one very important factor: the customers. The LPs that provide most of the
capital to the VCs (pension funds and endowments) expect and want a certain
product (2/20 funds run as partnerships, where each investment is attributed
to one of the partners). Business models that deviate from this are not
received well.

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Retzus
This is a good read [https://www.amazon.com/Buyout-America-Private-Destroying-
Ame...](https://www.amazon.com/Buyout-America-Private-Destroying-
American/dp/1591843693)

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growtofill
So they take less risk so the startups they fund can take more. No surprises
here?

