Another Ponzi scheme in Venture is slowly coming to an end as VCs start to clamp down on Secondaries, not only to prevent a-synchronicity between returns for entrepreneurs and VCs but more importantly between entrepreneurs and LPs.
Excessive diversification of risk by way of deal staging and round fragmentation already is a sign that many VCs do not understand upside investing, and they certainly cannot afford to lose any more downside (stemming from less hungry entrepreneurs) than they already have.
Secondaries are a new way to sell an aging promise to dumb money, useful in delaying the pop of a growing Venture Capital bubble. They are a sign that Venture Capital has not recovered at all, and is still desperately licking its sore wounds. What other Venture Capital constructs can we invent, short of telling LPs that the incompatible economic construct and the improper application of risk of Venture Capital are responsible for the suffocation of innovation?