4 ms·

> So the core part of the message that VC is broken because most of them don't beat the public markets doesn't really matter. No, it matters. Investors want

• dsacco 9y ago
  > Furthermore, is it even true that VC returns are not well correlated with the public equity markets? My guess is that they would be pretty closely correlated. On the contrary, I would posit that they're not correlated, or perhaps only weakly so. One of my primary concerns with the venture capital industry and the private equity markets in general is that there is no mature mechanism for the market consensus to reflect short opinions. In public markets, there can be significant dissenting voices expressed by short interest which will have a material impact on the price of an equity. In the private markets, pessimism from many parties cannot be used to directly influence the consensus price. In my view, this leads to a natural bias towards successful private companies rising in valuation over time, whereas public companies swing more easily in either direction and have a harsher regulatory climate. While both markets are influenced by things like interest rates, I would default to assuming that they significantly diverge in aggregate returns over time. They also have significant differences in liquidity, which means unhealthy economic trends in one may take a relatively long time to manifest in the other, even if they were otherwise correlated.