The genius of venture capital arbitrage on display: the demise of Lytro makes clear how the collusion of investor socialism in Silicon Valley destroys the opportunity for real innovation. I have a few more of these to highlight, for the sake of establishing a meritocracy of innovation arbitrage.
I suggest venture capitalists heed the following warning:
“If we avoid the losers, the winners will take care of themselves.” — Howard Marks, Oaktree Capital
A viewpoint the geniuses of venture capital arbitrage clearly disagreed with, as they went ahead and bet big on the wrong horse. Now, you may think: no big deal, every venture firm is bound to have a few misses. True, until you realize all this money, some $200M, could have gone to companies with a much better proposition, the false negatives of innovation missed as a result of many of VC’s dubious bets proven to be false positives. Hence, every VC failure counts double and subsequently erodes the thesis that determines what can be discovered (Einstein) at no less than twice the speed. A reason why we should take venture capital arbitrage very serious.
Limited Partner money spoiled, is how I qualify this one.
As an entrepreneur, I suggest you take the arbitrage of innovation deployed by the following investment firms and its listed general partners with a grain of salt: Greylock Partners, Andreessen-Horowitz, New Enterprise Associates, North Bridge Venture Partners, and last but not least Blue Pool Capital (unknown to me). For as an investor, you are bound to be remembered by the commonality of your uncommon performance. Check!
BTW: I decided it is important to expose this information to entrepreneurs and limited partners, for the marketplace of innovation should not be beholden to a systematic denial of a transparent meritocracy of its arbitrage.