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I agree in theory but not in reality. But it's the same situation where the the incentives of an LP and a VC are different (not really that different compared t
by seem_2211 7y ago
I agree in theory but not in reality. But it's the same situation where the the incentives of an LP and a VC are different (not really that different compared to a PE or Hedge Fund). Just like the incentives of a founder and a VC are aligned, until they aren't anymore. There's a reason LPs with squillions to invest carve off a tiny smidge to VCs, and it's not just returns - it's also downside protection. What's true for you and me for our personal finance is not necessarily true for the Harvard endowment.
- gowld 7y agoI thought it's because VC only had a smidge of capacity to absorb capital. You can't fit everyone's $10-$100B funds into VC projects. Less then 1% of Facebook's value is VC funding.
- mathattack 7y agoThat was a different era. Look at the latest crop of unicorns.
- nradov 7y agoNot so much downside protection or even absolute return, but rather uncorrelated returns.