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> Isn’t the whole basis of venture investment being able to identify business that will return above the risk-adjusted return? No, it's to generate proprietary
by w1ntermute 11y ago
> Isn’t the whole basis of venture investment being able to identify business that will return above the risk-adjusted return?
No, it's to generate proprietary deal flow by building a brand for your firm. YC has done this with HN and pg's essays, while a16z has done this with Marc Andreessen's incessant tweeting and all the blogging by Chris Dixon, Ben Evans, et al.
At this point, YC's/a16z's success has become self-perpetuating - the best founders/companies will apply to YC and pick a16z over other VCs, the best employees will join companies backed by YC/a16z, etc. It's no different from institutions like McKinsey or Harvard.
- danieltillett 11y agoSure, but they still have to pick the above average companies. Even if they don’t pick them and just them picking them means the company has a better chance of success then average then you should be picking companies that YC/a16z will like.
- w1ntermute 11y agoThe difficulty isn't in identifying the above average companies, it's in getting them to take your money. Given how little money it takes to get to an MVP these days, most companies backed by the top VC firms already have significant traction, or the founders have a prior success, pedigree, connections, etc. > you should be picking companies that YC/a16z will like. Just look up any of the articles on YC's demo days - you've got dumb money coming out of the woodwork from all over the world, trying to get a piece of the action.