4 ms·

There are LPs behind a lot of these incompetent VCs dumping money into in crypto, including public workers' pension funds.

seydor 4y ago
Pension funds are investing in VCs?
- kasey_junk 4y ago
  Yes? It’s extremely common.
- JumpCrisscross 4y ago
  > Pension funds are investing in VCs? Yes, commonly [1]. At the portfolio level, VC is about as risky as buyout [2]. [1] https://www.thebusinessofvc.com/blog/lp-universe?format=amp https://www.thebusinessofvc.com/blog/lp-universe?format=amp [2] https://timesofe.com/vc-fund-returns-are-more-skewed-than-you-think/ https://timesofe.com/vc-fund-returns-are-more-skewed-than-yo...
- twiddling 4y ago
  There is a lot of literature on how much pension funds are chasing exotic and high-risk investments due to the unexpected longevity of pensioners and persistence, until recently, of low interest rates example: https://reason.org/commentary/with-interest-rates-low-us-pension-funds-make-risky-emerging-market-debt-investments/ https://reason.org/commentary/with-interest-rates-low-us-pen...
deleted 4y ago
[deleted]
dehrmann 4y ago
My hope is most of the crypto investing was isolated to crypto funds, though I still lost some respect for VCs for even playing the crypto game.
- rescripting 4y ago
  Even big institutional investors were swindled by FTX: https://www.coindesk.com/business/2022/11/18/pension-giant-ontario-teachers-plans-to-write-off-all-95-million-invested-in-crypto-exchange-ftx/ https://www.coindesk.com/business/2022/11/18/pension-giant-o...
  - kristjansson 4y ago
    I mean ... that big fund carves off a tiny slice to make speculative, risky bets, and a small one of those bets failed. Hard to call it swindled.
- bloodyplonker22 4y ago
  I regret to inform you that it was not isolated to "crypto funds". A lot of VCs mish-mashed them together with their other investments and slapped a Cathy Wood style name on it like "future innovation fund". VCs are mostly just salespeople, and so are founders. VCs sell to organizations such as pension funds, and founders sell to VCs. Most VCs lose money, especially in an environment full of froth, and most VCs don't know what they are really doing. From what I have observed, a lot of laypeople have a ton of respect when they hear the word "VC".
  - dehrmann 4y ago
    > VCs are mostly just salespeople Only halfway. Don't the GPs have skin in the game?
    - bloodyplonker22 4y ago
      Yes, tiny fractions of basis points worth of their net worth.
vkou 4y ago
Those pension funds have a small part of their portfolio chasing high-yield investments. I don't cry crocodile tears when they overperform the SP500, and I can't say I'll be crying them when they underperform. ... Although given how frequently the Ontario Teachers' Pension fund has made the 'Pension funds invests into an incredibly dumb startup' news cycle, I suppose grifters, thieves, and conmen might consider them to be an easy mark.
- bombcar 4y ago
  Some aren't so small https://www.linkedin.com/feed/update/urn:li:activity:7000201102700818432/ https://www.linkedin.com/feed/update/urn:li:activity:7000201... This would be between 5 and 10% or so.
tptacek 4y ago
VC is a very small component of a pension fund; it's money that's often deliberately invested in weird decorrelated shit, for portfolio-theoretic reasons. There are lots of reasons to have a problem with crypto and defi! But the safety of pension funds vis a vis institutional VC is probably not really one of them. (You can imagine batshit pension funds that invest directly in crypto/defi stuff; that's extremely problematic.)

seydor 4y ago

Pension funds are investing in VCs?

kasey_junk 4y ago
Yes? It’s extremely common.
JumpCrisscross 4y ago
> Pension funds are investing in VCs? Yes, commonly [1]. At the portfolio level, VC is about as risky as buyout [2]. [1] https://www.thebusinessofvc.com/blog/lp-universe?format=amp https://www.thebusinessofvc.com/blog/lp-universe?format=amp [2] https://timesofe.com/vc-fund-returns-are-more-skewed-than-you-think/ https://timesofe.com/vc-fund-returns-are-more-skewed-than-yo...
twiddling 4y ago
There is a lot of literature on how much pension funds are chasing exotic and high-risk investments due to the unexpected longevity of pensioners and persistence, until recently, of low interest rates example: https://reason.org/commentary/with-interest-rates-low-us-pension-funds-make-risky-emerging-market-debt-investments/ https://reason.org/commentary/with-interest-rates-low-us-pen...

deleted 4y ago

[deleted]

dehrmann 4y ago

My hope is most of the crypto investing was isolated to crypto funds, though I still lost some respect for VCs for even playing the crypto game.

rescripting 4y ago
Even big institutional investors were swindled by FTX: https://www.coindesk.com/business/2022/11/18/pension-giant-ontario-teachers-plans-to-write-off-all-95-million-invested-in-crypto-exchange-ftx/ https://www.coindesk.com/business/2022/11/18/pension-giant-o...
- kristjansson 4y ago
  I mean ... that big fund carves off a tiny slice to make speculative, risky bets, and a small one of those bets failed. Hard to call it swindled.
bloodyplonker22 4y ago
I regret to inform you that it was not isolated to "crypto funds". A lot of VCs mish-mashed them together with their other investments and slapped a Cathy Wood style name on it like "future innovation fund". VCs are mostly just salespeople, and so are founders. VCs sell to organizations such as pension funds, and founders sell to VCs. Most VCs lose money, especially in an environment full of froth, and most VCs don't know what they are really doing. From what I have observed, a lot of laypeople have a ton of respect when they hear the word "VC".
- dehrmann 4y ago
  > VCs are mostly just salespeople Only halfway. Don't the GPs have skin in the game?
  - bloodyplonker22 4y ago
    Yes, tiny fractions of basis points worth of their net worth.

vkou 4y ago

Those pension funds have a small part of their portfolio chasing high-yield investments. I don't cry crocodile tears when they overperform the SP500, and I can't say I'll be crying them when they underperform. ... Although given how frequently the Ontario Teachers' Pension fund has made the 'Pension funds invests into an incredibly dumb startup' news cycle, I suppose grifters, thieves, and conmen might consider them to be an easy mark.

bombcar 4y ago
Some aren't so small https://www.linkedin.com/feed/update/urn:li:activity:7000201102700818432/ https://www.linkedin.com/feed/update/urn:li:activity:7000201... This would be between 5 and 10% or so.

tptacek 4y ago

VC is a very small component of a pension fund; it's money that's often deliberately invested in weird decorrelated shit, for portfolio-theoretic reasons. There are lots of reasons to have a problem with crypto and defi! But the safety of pension funds vis a vis institutional VC is probably not really one of them. (You can imagine batshit pension funds that invest directly in crypto/defi stuff; that's extremely problematic.)