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Downstream thinking in Venture Capital

Mark Suster of VC firm GRP Partners does a nice downstream Venture analysis, the only problem is that the resurrection of Venture Capital arbitrage from its negative 10-year performance relies on a different application of risk that requires upstream thinking and the creation of social economic value, not a continued chase of subprime technology utilities.

What follows is my comment to his article:

With all respect Mark, but this is a downstream analysis of Venture. Because certain events in VC occurred in a certain order, the next step in that order is relatively easy to predict and may indeed be correct. Yet, the real (upstream) question remains, if technology adoption worldwide is less than 80%, why is VC as the arbitrage not able to trace its massive greenfield. For the answer to that much more relevant question we need to look at the deflated deployment of risk in Venture, that has turned a high risk / high yield sector into the subprime class (with few exceptions) it is today.

[Links: PEHub]


About Georges van Hoegaerden

After my ideas had raised $14M and returned over $100M to investors in Silicon Valley I could not help but detect a systemic flaw in the way we detect, build, fund and support systems of innovation. On an entrepreneurial quest to root-cause I evolved my focus from the economics of innovation to the innovation of economics, and ended up completely rewriting the playbook of economics that must guide us all. I named my invention Renewable Economics™.

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