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That’s the model essentially. Makes a lot of sense too. Anyone can get S&P 500 returns with little to no risk. That’s not to say they won’t lose money but it’l
by highwaylights 3y ago
That’s the model essentially. Makes a lot of sense too.
Anyone can get S&P 500 returns with little to no risk. That’s not to say they won’t lose money but it’ll be market returns either way, will be very liquid, and readily transparent to the holder.
Given the risk involved in early stage investment the maths just don’t make sense for an investor to shoot for anything short of the moon.
tldr; Seed funding / early stage investing is closer to lottery tickets and Vegas than to your 401k.
- godzillabrennus 3y agoThere are motivations beyond return. Alignment of capital with values to support a team/product/service that you believe will help in a manner you care about.
- vidarh 3y agoYes, but those investments are not coming from "VC funds". At least not ones marketing themselves as such.
- santoshalper 3y agoThere are plenty of outcomes for an investment that sit between "S&P 500 Index" and "Unicorn Startup", and in fact most PE feeds in that range. But VCs are running the casino model where the law of large numbers works in their favor.
- lotsofpulp 3y ago> Anyone can get S&P 500 returns with little to no risk. Unless it’s buying SP500 index funds, I doubt it. Especially the last 15 years. I know quite a few people who would have been further ahead (financially) if they had just invested in SP500 and retired.
- rightbyte 3y agoEven beating the nominal index is hard, since losing companies just drop out and are replaced and you will own stock in them and not in the ones taking their place.
- highwaylights 3y ago> Unless it's buying index funds. I mean literal index funds.
- lotsofpulp 3y agoOh, sorry, I thought you meant operating a business that does not “swing for the fences” (as opposed to ones that do that are attractive to VC).