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Venture Capital industry

privateBearish

Industry comprising firms and funds that provide equity financing to early- and growth-stage private companies.

2 takes · first discussed Sep 20, 2024

Where they land
Bearish
Who's weighed in
SacksChamath
Takes
2
First discussed
Sep 20, 2024

Private company — no public price to score. We track what they said; valuation-mark tracking is on the roadmap.

Where they stand now

ChamathChamath
Bearish

Chamath argues the VC industry is structurally broken due to extended company gestation periods, the 2021 bubble inflating entry prices, broken IPO and M&A exit paths, and AI companies requiring far less capital — predicting average returns will decay 50-100% and the industry must reinvent its liquidity mechanisms.

E196 · Sep 20, 20241 call ↓
SacksSacks
Commentary

Sacks says VC is in a hangover from the 2020-2021 liquidity bubble that doubled entry prices and distorted returns, but sees light at the end of the tunnel with rate cuts and the AI wave potentially ushering in a new golden era for the industry.

E196 · Sep 20, 20241 call ↓

The discussion

Both Chamath and Sacks agree that the VC industry is suffering from the aftermath of the 2020–2021 liquidity bubble, which inflated entry valuations and distorted returns. However, they diverge significantly on the outlook: Sacks takes a mixed view, seeing the AI wave and rate cuts as potential catalysts for a new golden era, while Chamath is deeply bearish, arguing the industry is structurally broken due to broken IPO and M&A exit paths, longer company gestation periods, and AI's reduced capital requirements — predicting average returns will decay by 50–100%. Chamath sees the problems as existential and structural, whereas Sacks frames the current pain as a cyclical hangover with a plausible path to recovery.

How they got there

ChamathChamath1 mention since Sep 20, 2024
BearishE196Sep 20, 2024⚑

Chamath argues the VC industry is structurally broken due to extended company gestation periods, the 2021 bubble inflating entry prices, broken IPO and M&A exit paths, and AI companies requiring far less capital — predicting average returns will decay 50-100% and the industry must reinvent its liquidity mechanisms.

we are not in a sustainable industry. It is if you raise funds and think about fee generation, but it is not… I do think that we are in a situation where the average returns are going to decay by 50 to 100%”
SacksSacks1 mention since Sep 20, 2024
CommentaryE196Sep 20, 2024⚑

Sacks says VC is in a hangover from the 2020-2021 liquidity bubble that doubled entry prices and distorted returns, but sees light at the end of the tunnel with rate cuts and the AI wave potentially ushering in a new golden era for the industry.

I think we're just in the hangover of this massive liquidity bubble… the good news is that we now have maybe the most exciting tech wave ever, which is AI… So the hope is we're finally going to have really exciting things to invest in again”56:22
iAbout these quotes
Quotes are machine-transcribed from the episode audio — use the Listen links to verify any take against the source, or the ⚑ link to report a problem. Takes marked unverified, low-conviction, or commentary-only never move stances, the index, or the funds.