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Considering that the top quartile venture capital as an asset class generally performs at ~20% IRR and outperforms public markets, it's empirically not true tha

Considering that the top quartile venture capital as an asset class generally performs at ~20% IRR and outperforms public markets, it's empirically not true that the system funds hustlers over builders. The better VCs fund builders. If they aren't funding you, it's not necessarily that they're just ignorant and busy funding businessy hustlers; it's perhaps that there's issues with the deal that make it not investable (from targeting a market too small, to missing critical skills on the founding team, etc). (I'm a VC)

HWR_14 5y ago
I have to question comparing the top quartile in one class to the average in another. The top quartile of mutual funds also produce high returns and outperform public markets. Heck, the top quartile of horse race bettors probably outperform the market as well. That said, I believe your core point. My guess is the person you are responding to is missing vital core skills or otherwise has an uninvestable company. It might be fixable (hopefully) or not.
throwaway1556 5y ago
I fully understand the point you make However, having spent time with funds now -- it feels like those two criteria (market/team) are defined with heavy bias to what exists today So building some radically new tech -- that is not directly comparable to unicorn X or Y who vaguely exist in a similar space -- will fail at first funding hurdle unless you move that R&D work closer to what X or Y are doing -- to the point you're just building a clone of something successful today This potentially eliminates a lot of tech that is innovative -- try showing a VC some tech that is not SaaS right now as what you're trying to achieve doesn't lend itself to that model Same on the team front -- VCs appear to expect a founding team to be defined as B, C, D and any team that does not fit those boxes must be missing some critical skills -- leading to pressure on founders to fill gaps at start that they don't think are gaps -- just to jump through some artificial hoop set by the VCs who only seem to want to put pegs into predefined holes

HWR_14 5y ago

I have to question comparing the top quartile in one class to the average in another. The top quartile of mutual funds also produce high returns and outperform public markets. Heck, the top quartile of horse race bettors probably outperform the market as well. That said, I believe your core point. My guess is the person you are responding to is missing vital core skills or otherwise has an uninvestable company. It might be fixable (hopefully) or not.

throwaway1556 5y ago

I fully understand the point you make However, having spent time with funds now -- it feels like those two criteria (market/team) are defined with heavy bias to what exists today So building some radically new tech -- that is not directly comparable to unicorn X or Y who vaguely exist in a similar space -- will fail at first funding hurdle unless you move that R&D work closer to what X or Y are doing -- to the point you're just building a clone of something successful today This potentially eliminates a lot of tech that is innovative -- try showing a VC some tech that is not SaaS right now as what you're trying to achieve doesn't lend itself to that model Same on the team front -- VCs appear to expect a founding team to be defined as B, C, D and any team that does not fit those boxes must be missing some critical skills -- leading to pressure on founders to fill gaps at start that they don't think are gaps -- just to jump through some artificial hoop set by the VCs who only seem to want to put pegs into predefined holes