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"Venture funds are big: ... The VCs running a $1 billion fund don't have the time to manage one thousand $1 million investments. VCs collude: ... I attended

"Venture funds are big: ... The VCs running a $1 billion fund don't have the time to manage one thousand $1 million investments. VCs collude: ... I attended a recent talk by a VC luminary, who gloated over the state of the venture industry, after money for technology start-ups was scarce. Here's my summary of the VC's view: "A year ago there was too much money available, so there was too much competition to fund good ideas. ... Valuations are reasonable and, with few rivals in each sector, new markets will develop--as they might not have with many rivals." This is nonsense. ... I'm not talking about market size or market opportunity...; I'm talking about rates of innovation." -- What's this called? What do economists call it? Why isn't it obvious? -- Attempt to restate problem: Large investors prefer fewer, larger deals. Because of attention scarcity and transaction costs. Today, we have excess idle capital under performing AND zillions of unfunded ideas, unending needful work not being done. This applies to all investors. VCs, governments, megacorps, etc. The genius of Y Combinator is reducing transaction costs, enabling more ideas to get funded efficiently. How do we (society) do A LOT more of that? How do we make broad portfolios the norm? -- Policy platform statement: Lacking other ideas for how to connect capital with small to modest investments, I support wealth redistribution. Radical repeated cashectomies and stifling regulations for the current 0.1%. Radical laissez faire and near free capital (zero interest loans, grants, government largess) to seed small, young business development. Ridiculous, audacious, ambitious moon shot programs. X-Prizes, stipulate that all funds must allocate some fraction to high risk high reward efforts, genius grants, a firehose of funding for academia, arts, culture, community building, whatever. Basically recreate the New Deal's CCC. Set some benchmark, like target funding of say 1% of GDP. Naturally, I support UBI, universal health care, free childcare, jubilee style bankruptcy protections, and so forth. For the very pragmatic reason of unlocking human potential by reducing (removing) individual risk.

phkahler 5y ago
>> Large investors prefer fewer, larger deals. Because of attention scarcity and transaction costs. >> Today, we have excess idle capital under performing AND zillions of unfunded ideas, unending needful work not being done. That might be a consequence of the concentration of wealth that's been happening. Not only does a VC have limited attention, but there aren't many ideas that need billions of dollars to fund. It might be better for startups to have twice as many rich guys with half as much money. OTOH maybe there's a way for them to spread it around more with a layer of oversite? But they'd need trusted oversite, and I'm guessing that's hard for them to find.

phkahler 5y ago

>> Large investors prefer fewer, larger deals. Because of attention scarcity and transaction costs. >> Today, we have excess idle capital under performing AND zillions of unfunded ideas, unending needful work not being done. That might be a consequence of the concentration of wealth that's been happening. Not only does a VC have limited attention, but there aren't many ideas that need billions of dollars to fund. It might be better for startups to have twice as many rich guys with half as much money. OTOH maybe there's a way for them to spread it around more with a layer of oversite? But they'd need trusted oversite, and I'm guessing that's hard for them to find.