The easiest way to raise a new fund is to ride the coat-tail of Apple or Facebook, because neither thesis can possibly be questioned by Limited Partners.
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.
P.S.: From Paris with love.
- Price loses its value when money loses its trust. — Georges van Hoegaerden - February 20, 2015
- How to build a sustainable company - February 10, 2015
- Economics: A system designed to maximize personal freedom protected by the paradoxical rules of collective freedom. — Georges van Hoegaerden - February 2, 2015
- Capitalism without the deployment of operating principles that secure a meritocracy is an oligarchic system in violation of the most rudimentary definition of freedom we owe ourselves. — Georges van Hoegaerden - February 1, 2015
- Equality is a fantasy of extraordinary proportion. — Georges van Hoegaerden - January 21, 2015
- If no man is created equal, why then do we debate equal pay? — Georges van Hoegaerden - January 21, 2015
- CalPERS pre-empts asset allocation - January 21, 2015
- Homogenization of people is a bad idea, we ought to focus on the value of our differences, not on the rut of our commonalities. — Georges van Hoegaerden - January 14, 2015
- Only realism can breed justifiable optimism. — Georges van Hoegaerden - January 14, 2015
- The fix to improving asset management’s effectiveness lies in its reinvention, not in the optimization of its bloated past. — Georges van Hoegaerden - January 13, 2015