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> The ancient “2 percent and 20 percent” should be killed off and replaced with something that endorses higher alignment. Let the VCs fight for their supper. I
by mbesto 9y ago
> The ancient “2 percent and 20 percent” should be killed off and replaced with something that endorses higher alignment. Let the VCs fight for their supper.
I agree, this is a stupid fight. Higher alignment is called "Private Equity" and it already exists as a model. VCs will go where the market (i.e. the money) tells them, which right now is 2/20. All of the VCs that don't return their funds will simply stop getting LP money and cease to exist.
> I recently had a meeting...talking about the macro view of venture capital and how it doesn’t actually make sense....It took me a while to understand what this really means.
Ok so the author just had a meeting with an angel investor, decided to do all of the research (that's already freely available mind you) and came to the same conclusion as everyone else. Ugh.
- jonwachob91 9y ago>>>Higher alignment is called "Private Equity" and it already exists as a model. That is NOT what PE is at all! PE is about buying WHOLE companies that have established businesses but are struggling. PE does NOT invest in growth companies that are new to the market / not yet proven, nor do they take small percentage ownership.
- vonmoltke 9y ago"Private equity" is any investment position, including VC, in a private company. What you are describing is specifically distressed investments. There are plenty of firms who make growth or mezzanine investments in established companies that need a quick infusion of capital.
- mbesto 9y ago> that have established businesses but are struggling. > PE does NOT invest in growth companies I've advised over 50 transaction on behalf of Private Equity firms. These are not true statements.