Pondering why today there are not many exits over $100M is Fred Wilson at AVC. Fred confuses downside money-in with risk, as a Venture investor he should know the timing and size of money-in relative to the upside trajectory identifies risk.

Round sizes do not indicate risk, as you can see from my blog ("The economy is not the problem") where I use Vinod's quantification of the deflation of risk with the same money-in. And deflated risk equals deflated returns, hence the reason why subprime VC can only return subprime PE returns.The challenge for VCs is to not look at innovation like deals (or a commoditization of down-side risk), but treat them individually and each with their unique risk and funding requirements. But that assumes a GP who can assess upside risk (rather than money-in, downside) correctly and we are in short supply of GPs who can do that.The problem with innovation remains its arbitrage, not the lack of ideas that can produce great returns.Best,Georges

[Links: AVC]

Tags: Fred Wilson, Union Square Ventures