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Yep. When you make a private investment (and I have), you have to fully expect to never see that money again. The truth is you probably won't. One time I did ge
by icedchai 6y ago
Yep. When you make a private investment (and I have), you have to fully expect to never see that money again. The truth is you probably won't. One time I did get a return, and it was nothing to write home about. I would've been better off buying a tech ETF.
- tptacek 6y agoHistorically, as an asset class, VC has routinely underperformed the S&P 500. Even on HN, which is full of startup people, the mental model people have about the investing business model is dominated by the outcomes of successful companies, rather than any notion of portfolios of successes and failures. Another detail retail investors don't have: startup investors re-invest to keep pro-rate shares in future rounds. You have to keep feeding companies money to keep your share. Explain that to my Aunt Rita. Another thing is, the LPs in VC funds aren't putting money in just because they think it'll be a super-successful investment that they want access to; some of them have portfolio allocation rules, and requirements to invest funds in things decorrelated from public markets. Which is just to say, a pension fund goes into these things with eyes wide open, unlike a skittish retail investor and his Lionel Hutzian legal advisors.