I totally agree with you in aggregate. If you take the entirety of the VC/Angel scene and figure out the overall return, it's probably not that much different t

I totally agree with you in aggregate. If you take the entirety of the VC/Angel scene and figure out the overall return, it's probably not that much different than other investment vehicles (it's probably a bit higher, since there are barriers to entry, which prevents everyone from getting into the game). But my point was for those upper echelon's of VC/Angels who actually make money. PG has pointed out in the past that there really are only a handful of VC/Angels that actually consistently make money (and more importantly in the case of VCs make money for their investors). You're right that my case was idealized, but investment losses can also be used to offset gains for tax purposes, and this is an industry of lawyers, so I doubt the tax effects are as clear cut as either of us paints them to be. And I still maintain my overall point that 3.8% isn't going to suddenly kill the startup scene. If it was that tax sensitive, it wouldn't be in California to begin with.