From the VC marketing bullhshit they assume that the "only" way to create a company is "to create the next billion dollar company"
We don't (or at least we shouldn't).
The issue is as a VC you have LPs who are very demanding about returns. VC represents a minority of their total capital outlay, but they put money in VC in order to get outsized returns.
If I'm the Ontario Provincial Pension and I gave a VC US$200M, I expect to make way more money from the VC fund than I would have investing in the stock market, or bonds, or gold, or to a PE/IB/Hedge Fund.
VC is just another financial instrument that is a part of diversified portfolios.
If I had to use stereotypes, if PEs are alcoholic coke heads, VCs are kombucha swilling stoners and trippers.
If you are the Ontario Provisional Pension, you expect to make roughly the same in every category you invest in, since every higher return option comes with higher risk.
It's the cornerstone of investing. You diversify to hedge risk, not to increase total yield.
Comments
We don't (or at least we shouldn't).
The issue is as a VC you have LPs who are very demanding about returns. VC represents a minority of their total capital outlay, but they put money in VC in order to get outsized returns.
If I'm the Ontario Provincial Pension and I gave a VC US$200M, I expect to make way more money from the VC fund than I would have investing in the stock market, or bonds, or gold, or to a PE/IB/Hedge Fund.
VC is just another financial instrument that is a part of diversified portfolios.
If I had to use stereotypes, if PEs are alcoholic coke heads, VCs are kombucha swilling stoners and trippers.
If you are the Ontario Provisional Pension, you expect to make roughly the same in every category you invest in, since every higher return option comes with higher risk.
It's the cornerstone of investing. You diversify to hedge risk, not to increase total yield.