vc

The biggest risk as an allocator is not taking risks . While one’s downside is capped by diversification across funds, vintages, and domains—the biggest risk is not to swing big enough and to cap one’s upside as well, and to stack a bunch of 3x funds, charge fees on top, and sell 2.5x back to one’s investors.

Let me emphasise that the problem in investing is not a lack of skill -it is the exact opposite, there's too much skill. But the discussion also places the emphasis -properly -on the distribution of skill. And that has gotten narr ower virtually everywhere we look

Today, it’s quite different. The VC side has unbundled into all sorts of niche firms who act as signal for larger multi-stage GPs, and who partner at nearly every stage of technology risk level.

It also means that one cannot afford to create static strategies in a backward-looking way and expect venture-scale returns, rather bet on discontinuities and update the strategy and the resulting portfolio along with the market shifts.

In an industry of outliers, many allocators have ignored outliers for a long time and preferred funds that are sustainable, process-driven , big enough to scale relationships, often to settle with 3x returns over 12 years with no clear path to liquidity.

Are we back to the good old days of actual contrarian thinking? When a16 invested in Airbnb, market analysis suggested the short-term rental market was too niche and regulatory barriers too high. Their willingness to override consensus analysis—precisely the kind that research agents excel at producing—led to one of venture capital's greatest retur... See more

Similarly, most venture funds perform better in a market of steep ups and downs rather than steady growth. If you own something worth nothing, the dispersion of the potential outcome increases the likelihood that this will be worth something.

At that point, an uncle pulled him aside and offered some advice: "Jim, I wouldn't spend my time getting better; I'd spend my time finding weaker games." In other words, instead of finding players who are as skilled as you are, you want to find players who are not as good as you are and who are rich. That way, you have a better chance of walking ou... See more

Our thesis is that:

1. The best deep tech GPs will see better opportunities now than they did five years ago,


2. These opportunities will be missed by most outsider investors, and


3. Because of way tech risk is mitigated, the biggest bottleneck to allocation exists at seed