
When capital prefers venture over public markets - cdcro
http://techcrunch.com/2016/03/03/when-capital-prefers-venture-over-public-markets/
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entee
This article touches on, but doesn't explore very much the main problem that
there's only a limited number of companies that are actually worth the
investment. It's not necessarily a given that if there is more money in VC
more great companies will succeed.

There's a limited number of companies that will be Great, more money doesn't
increase that supply. Instead, more money chasing deals means companies with
somewhat suspect business models are allowed to go on longer than they should,
wasting of course cash, but more importantly the time of those working
tirelessly at those companies.

It's really unclear that the answer to "public markets are hard to predict and
have limited upside" is "let's invest in a more risky, more opaque asset
class".

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nibs
The only thing I would add to this would be how hungry the capital machine is
for growth. Public equities are simply not outrunning the bear in a way that
certain well placed and timed companies are. And those companies command
astronomically high market capitalizations because of growth. Not profit.
Capital doesn't need profit right now. There is plenty to go around.

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rdlecler1
First, private investors often have what would amounts to insider information
if the company was public. Investors who are close to the company can take
advantage of information asymmetries. Second, if you're a private fund then
you have more freedom to value your own investments annually. Compare that to
public markets where investors may start asking for redemptions after a bad
week and a 10% decline. Private capital is more patient. Third, private
markets are the new public markets. No one wants to go public and deal with
the regulations and short term market jitters. If you can access capital in
the private markets you'll do it as long as you can. I expect liquidity in
private markets will greatly improve, if so we could see significantly more
capital enter the space.

