Economic innovation for a bright new world
As a limited partner I feel uninformed
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How Steve Jobs proved Venture Capital wrong
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About Venture Capital Trusts
No Charles, you are wrong. Venture Capital (no matter who feeds it) is the improper economic construct to support its underlying asset (innovation). Multiple facets are highlighted on my website, but the short of it is that you can’t expect to generate outlier returns from a uniform deployment of investment risk (I coined subprime VC).And the last thing government should do is meddle in the business of innovation. The role of government is to ensure markets operate and obey according to strict free-market principles. And we lack the most fundamental free-market principles that our forefathers instilled upon us. That is why we fail to detect the groundbreaking innovation that fantastic entrepreneurs in this country can create, and we instead have amassed the messy noise of false negatives that turns Limited Partners and the public off.The answer to improving the success of innovation is not to deploy the same deflated risk through new distributions, but to deploy the appropriate risk to the outlier entrepreneurs that deserve it.
Find the original article and my response to it online here
. Europe's PE & VC confidence, shaken not stirred
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Ignore the Dow
I agree with Brad’s announcement but for slightly different reasons:
Agreed Brad, but for slightly different reasons. No one should correlate the Dow with the state of the economy. Simply because the stock market is not a free-market system (see my blog) and therefor is not representative of the value of the underlying asset. So get on with life and build great innovation.
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. We should instead be razor focused on diminishing our debt, or better jet improving income (rather than taxes). Downstream thinking in Venture Capital
What follows is my comment to his article:
With all respect Mark, but this is a downstream analysis of Venture. Because certain events in VC occurred in a certain order, the next step in that order is relatively easy to predict and may indeed be correct.Yet, the real (upstream) question remains, if technology adoption worldwide is less than 80%, why is VC as the arbitrage not able to trace its massive greenfield. For the answer to that much more relevant question we need to look at the deflated deployment of risk in Venture, that has turned a high risk / high yield sector into the subprime class (with few exceptions) it is today.Best,Georges
[Links: PEHub
]LP entrapment
Prominent Venture Capital firm Kleiner-Perkins (KPCB) shows off its lack of entrepreneurial vision with its reported upcoming new fund in a string of previous LP entrapments. First green-tech, which we predicted a long time ago does not yield VC vintage returns. Then the iFund, for the creation of $1B companies from ASPs (average sales price) less than $10 (really?) to a social fund with Facebook, which companies at any point Facebook can choose to displace or disable (really!), to now a Cloud fund for technology utilities to appease the many technology laggers who have a hard time competing with Apple (desperately). Do none of the LPs realize that the risk of investing in technology is not technology?
But in the end Limited Partners won’t hold VC firms accountable to sticking to the Private Placement Memorandum (PPM) thesis, as long as the firm still creates some meaningful return from it. And when a VC firm manages this many concurrent funds, its large investment networks have enough deal diversification to make any investment that walks in their door fit one or more of the available PPMs. Lack of accountability to the original thesis in the PPM is the outcome of a Venture Capital demi-cartel, the opposite a free-market of investing with optimal entrepreneurial discovery would endure.
I continue to be amazed by the games VC firms play to stay in the game, that deflate not propel the opportunity for disruptive innovation. And that is why I dare challenge the intentions of the VC gods. [Links: PEHub
]P.S.: From Paris with love.
Subprime Venture Capital
We explain the meaning of the term “subprime VC” we first coined a couple of years back and explain how Limited Partners (and entrepreneurs) can avoid them.
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No Venture beats subprime
- Israeli Venture Funds raised $0 dollars in 2010. Smart. Not investing in Venture is better than turning Venture subprime, because when you invest in Venture subprime, you'll hurt the economy twice (you'll just find out how ten years later). Have a chat with American Limited Partners who have not made a positive return since 1998. The economic model under which Venture operates and deploys risk needs to change first. [Links: PEHub
]
UK Venture down
- The UK is looking into raising its Venture deals after a steady decline, with a Venture czar responsible for luring new deals in. Good luck considering that the economic model in Venture is flawed and by economic principle can only produce subprime returns, no matter how much money you throw at it.
Venture Capital's problems will continue
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Why Venture firms below $250M cannot succeed
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New expectations for Limited Partners in Venture
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A grand new opportunity in Venture
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How to fix VC once and for all
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The delicacy of european investments
