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I don't know much about VC but I thought taking risks was the name of the game? Isn't that what "venture" in VC mean? I'd understand if this was Ontario Teache

I don't know much about VC but I thought taking risks was the name of the game? Isn't that what "venture" in VC mean? I'd understand if this was Ontario Teachers Pension Fund or something like that where a large amount of capital had to move around to generate some sizable returns. Even these money managers are scrutinized for bad decisions. The whole 'not our area of focus' seems to be the same line mutual fund managers use during report card season by writing off bad picks and claiming they beat the market.

tekacs 11y ago
I'm passing on rather than defending their behaviour. Having said that, there's perhaps something to be said for picking one's battles? Indiscriminately attempting to capitalise on any lucrative opportunity seems like a common road to ruin (feature creep, startups that put everything in scope, https://xkcd.com/793/ https://xkcd.com/793/).
- curiousjorge 11y ago
  While that makes sense for established markets like the stock market, I don't think the same can be applied to the early stage tech market or reading into fundamentals. Certainly trying to capture all opportunity in the stock market can lead to mediocrity (over diversification) but when one bet can produce returns that more than makes up for all the other tiny bets, hard to fathom why that isn't a much more attractive strategy. For example, make 1% stake bets stretched across 100 startups vs 20% stake bets stretched across only 5 startups I "understand" or feel comfortable with. Isn't the risk inherently bigger if you chose the latter? If one of those 100 startups end up producing low to mid 5 digit ROI, shouldn't that cover for the 99 other bad bets? The probability increases since you are not introducing any personal biases and exposed to more upside potentials.
bigtunacan 11y ago
It's about taking educated risks to the best of their ability. Otherwise there are a lot of people selling bridges... This advice comes straight from the oracle of Omaha himself, "Never invest in a business you can't understand."
scardine 11y ago
Last time I checked the name of the game was making more than 100 times the amount invested in less than 5 years - taking risks is a unavoidable side effect.

tekacs 11y ago

I'm passing on rather than defending their behaviour. Having said that, there's perhaps something to be said for picking one's battles? Indiscriminately attempting to capitalise on any lucrative opportunity seems like a common road to ruin (feature creep, startups that put everything in scope, https://xkcd.com/793/ https://xkcd.com/793/).

curiousjorge 11y ago
While that makes sense for established markets like the stock market, I don't think the same can be applied to the early stage tech market or reading into fundamentals. Certainly trying to capture all opportunity in the stock market can lead to mediocrity (over diversification) but when one bet can produce returns that more than makes up for all the other tiny bets, hard to fathom why that isn't a much more attractive strategy. For example, make 1% stake bets stretched across 100 startups vs 20% stake bets stretched across only 5 startups I "understand" or feel comfortable with. Isn't the risk inherently bigger if you chose the latter? If one of those 100 startups end up producing low to mid 5 digit ROI, shouldn't that cover for the 99 other bad bets? The probability increases since you are not introducing any personal biases and exposed to more upside potentials.

bigtunacan 11y ago

It's about taking educated risks to the best of their ability. Otherwise there are a lot of people selling bridges... This advice comes straight from the oracle of Omaha himself, "Never invest in a business you can't understand."

scardine 11y ago

Last time I checked the name of the game was making more than 100 times the amount invested in less than 5 years - taking risks is a unavoidable side effect.