Beware The Race To Vanguardize and Marketize Venture Returns

Good morning everyone.

As this boom has continued endlessly, it seems like every American has either become a speculator, a seed investor or a Venture Capitalist. I’m not one to cast dispersions as I have become all three myself.

Today I’ll comment on what I see happening in the large Venture Capital market.

When WeWork was thought to have blown up (I guess it did in some way though today it is public via SPAC and trades as $WE), it seemed like the too big to fail Softbank would be a thing of the past. Instead we got 20 Softbanks from Coatue to Tiger to D1 etc…

Tiger has gone one step further in removing the art from Venture Capital and in it’s ‘blitzkrieg’ of putting money to work is trying to capture ‘venture market returns’ for their clients.

I have no idea what those ‘market’ returns turn out to be now that so many are playing the same game, but it is a strategy.

Yesterday, the gynormous Sequoia said the VC Model is outdated and announced a change totheir structure. Have a read.

Howard here…

I doubt anyone listens to me but the VC model is not outdated…it is under assualt from all the money that has been printed and recycled from fantastic exits the last few years. The ‘art’ of VC is under assault as everything moves faster, most importantly decision times for investors and the sizes of deals.

I choose to stick to the old way of investing in startups and structure and that is to keep the structures simple and old fashioned.

I invest to trounce the markets and at times like this with everyone battling for ‘market returns’ too many weird things will happen.

Beware complicated structures.