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>relies on investors whose capital comes entirely from the concentration of wealth Not entirely. A lot of the VCs (and also hedge funds, private equity) get

by jasode 8y ago

>relies on investors whose capital comes entirely from the concentration of wealth Not entirely. A lot of the VCs (and also hedge funds, private equity) get money from regular people like us in the form of pension funds. Think of retired teachers, firemen, grandmothers, etc. E.g. the Oregon Public Employees Retirement Fund was one of the investors in Union Square Ventures. Yes, some money does come from wealthy family offices like the Vanderbilts but the huge pension funds trying to meet their obligations have even more money to invest.

bradknowles 8y ago
Not for much longer. Pensions were eliminated in most employers in favor of 401k or other types of investment vehicles, and so Pension funds will get more rare and smaller over time. The day of the Pension Fund is largely over.
- bradknowles 8y ago
  The modern alternative to Pension Funds are Hedge Funds. The difference is that Hedge Funds are created by the ultra-wealthy, for the ultra-wealthy. And their only purpose is to generate massive amounts of more wealth, for the ultra-wealthy.
earthscienceman 8y ago
You be seriously claiming that? It's literally an easily provable falsehood. Just because there are some pension funds investing in stocks and VCs doesn't mean it's a meaningful component, they are one of the smallest pieces of the pie. Your comment is quite literally just wrong. Your average American has relatively no direct stake in financial systems. Notice the word "average". Most people on HN tend to mistake that for meaning them. You are not average if you have enough wealth to think that investing money is normal, even in pensions. Estimates of the percent market investment tied up in pensions is something between 5% and 15% https://www.bls.gov/opub/ted/2013/ted_20130103.htm https://www.bls.gov/opub/ted/2013/ted_20130103.htm https://www.cnbc.com/2017/06/13/heres-how-many-americans-have-nothing-at-all-saved-for-retirement.html https://www.cnbc.com/2017/06/13/heres-how-many-americans-hav... https://protectpensions.org/2018/01/02/united-states-without-pensions/ https://protectpensions.org/2018/01/02/united-states-without...
- jasode 8y ago
  >some pension funds investing in stocks and VCs doesn't mean it's a meaningful component, they are one of the smallest pieces of the pie. In the case of Union Square Ventures, the majority of the money in their 2004 fund came from pension funds. It's all public information. >Estimates of the percent market investment tied up in pensions is something between 5% and 15% Your 3 links and the "5 to 15%" math are not relevant to my point. Let my try to put it another way. Let's say you looked at the LPs (investors) of a VC fund that raised $400 million. The list of wouldn't be filled with just the Rockefellers and Vanderbilts. The money sources do not entirely from the concentration of wealth. Instead, a lot of the money comes from retirement pension funds, charities trying to stretch out their donations, university endowments, etc. And it's not just the public & private pension funds in the USA. Canada and Europe pensions also invest in VC funds. And yes, pretty much every pension fund[0] invests in a mix of alternative assets including private equity, hedge funds, and venture capital. Pension fund managers can't meet their financial obligations by only parking their billions in T-Bills or only investing in a passive index. They need the higher returns of those alternative investment vehicles. [0] examples of public pension funds with funding shortfalls: https://en.wikipedia.org/wiki/Public_employee_pension_plans_in_the_United_States https://en.wikipedia.org/wiki/Public_employee_pension_plans_...

by jasode 8y ago

bradknowles 8y ago

Not for much longer. Pensions were eliminated in most employers in favor of 401k or other types of investment vehicles, and so Pension funds will get more rare and smaller over time. The day of the Pension Fund is largely over.

bradknowles 8y ago
The modern alternative to Pension Funds are Hedge Funds. The difference is that Hedge Funds are created by the ultra-wealthy, for the ultra-wealthy. And their only purpose is to generate massive amounts of more wealth, for the ultra-wealthy.

earthscienceman 8y ago

You be seriously claiming that? It's literally an easily provable falsehood. Just because there are some pension funds investing in stocks and VCs doesn't mean it's a meaningful component, they are one of the smallest pieces of the pie. Your comment is quite literally just wrong. Your average American has relatively no direct stake in financial systems. Notice the word "average". Most people on HN tend to mistake that for meaning them. You are not average if you have enough wealth to think that investing money is normal, even in pensions. Estimates of the percent market investment tied up in pensions is something between 5% and 15% https://www.bls.gov/opub/ted/2013/ted_20130103.htm https://www.bls.gov/opub/ted/2013/ted_20130103.htm https://www.cnbc.com/2017/06/13/heres-how-many-americans-have-nothing-at-all-saved-for-retirement.html https://www.cnbc.com/2017/06/13/heres-how-many-americans-hav... https://protectpensions.org/2018/01/02/united-states-without-pensions/ https://protectpensions.org/2018/01/02/united-states-without...

jasode 8y ago
>some pension funds investing in stocks and VCs doesn't mean it's a meaningful component, they are one of the smallest pieces of the pie. In the case of Union Square Ventures, the majority of the money in their 2004 fund came from pension funds. It's all public information. >Estimates of the percent market investment tied up in pensions is something between 5% and 15% Your 3 links and the "5 to 15%" math are not relevant to my point. Let my try to put it another way. Let's say you looked at the LPs (investors) of a VC fund that raised $400 million. The list of wouldn't be filled with just the Rockefellers and Vanderbilts. The money sources do not entirely from the concentration of wealth. Instead, a lot of the money comes from retirement pension funds, charities trying to stretch out their donations, university endowments, etc. And it's not just the public & private pension funds in the USA. Canada and Europe pensions also invest in VC funds. And yes, pretty much every pension fund[0] invests in a mix of alternative assets including private equity, hedge funds, and venture capital. Pension fund managers can't meet their financial obligations by only parking their billions in T-Bills or only investing in a passive index. They need the higher returns of those alternative investment vehicles. [0] examples of public pension funds with funding shortfalls: https://en.wikipedia.org/wiki/Public_employee_pension_plans_in_the_United_States https://en.wikipedia.org/wiki/Public_employee_pension_plans_...