Honey, We Need To Talk About Venture Capital
Here are some general thoughts:
Sinéad O’Sullivan • Honey, We Need To Talk About Venture Capital
agree with 1 and 3. For 2- is there anything left?
You can trace the shift cleary through three eras:
- Venture Capitalism (pre-2008)
- Alpha driven by : Risk and discovery.
- Example : Early Google, Genentech, small funds, asymmetric bets.
- Purpose : Generate outsize returns on investment.
- Venture Developmentalism (2008-2020)
- Alpha driven by : Coordination under the state.
- Example : Uber, Airbnb,
Sinéad O’Sullivan • Honey, We Need To Talk About Venture Capital
So when an administration wants to rebuild American industry, it calls the same people who fund the startups (because these people rebuilding and funding are the same people). Similarly, when venture funds want guaranteed returns, they wrap themselves in the language of national security, competitiveness, or “abundance” to move closer to the White... See more
Sinéad O’Sullivan • Honey, We Need To Talk About Venture Capital
this isnt a bad thing? we have also seen this play out in other finacnial markets…it was inevitable. technology leads government does not
Hence you can see that the very logic of venture has inverted. And that the goal is no longer to discover new markets but to secure existing the markets that hold competitive power through policy, narrative, and procurement.
Sinéad O’Sullivan • Honey, We Need To Talk About Venture Capital
this is in line with “nothing is non-consensus” anymore
Most funds don’t lose (by which I mean: they do not beat the benchmark, or even the S&P 500) because they’re foolish; they lose because they’re uninstrumented, by which I mean:
- They mistake deal flow for alpha;
- They optimize for access to founders instead of access to rules, budgets, and buyers.
- They staff platform teams but not policy teams;
- They
Sinéad O’Sullivan • Honey, We Need To Talk About Venture Capital
A tiny slice of firms sits on policy-backed certainty and captures most of the gains, massively outperforming the market (because if you are the one writing the revenue checks for your portfolio companies, there’s something wrong if you’re not winning!), while the long tail does “venture capital” in the old sense: sourcing founders, haggling over... See more
Sinéad O’Sullivan • Honey, We Need To Talk About Venture Capital
maybe on a absolute cash basis..but not on multiples.
Hence, the American government no longer simply funds or regulates innovation, but merely outsources it to its own financiers. This includes everything from energy to defense to AI, where federal programs now function less as public initiatives and more as co-investments in the portfolios of Big Venture.
Sinéad O’Sullivan • Honey, We Need To Talk About Venture Capital
is this really the vc’s doing? or because govt is inept
she paints vc in a very bad light
Thus, the bigger the growth of your fund, the more the distribution curve flattens. Returns concentrate. And the entire model shifts from optionality (I wonder if I should invest in that business?) to obligation (I have to invest in that business because I have to spend this money somehow!).
Sinéad O’Sullivan • Honey, We Need To Talk About Venture Capital
So yes, the math worked because the markets were open, the information asymmetry was very real, and the exit paths were organic. IPOs happened all the time, and averaged the $160 million deal size. Venture capital, at its best, was capitalism’s laboratory: small, experimental, and occasionally hitting home runs.