DISCLAIMER: Things I am not: an accountant, a lawyer, a fiduciary to any reader, or a registered advisor. I’m just a guy writing a newsletter so none of this constitutes any tax, accounting, legal, life, or investment advice.

Following up from last….year!?!?

I’m back, I wrote this newsletter weekly for 12 weeks and just hit a wall. It takes a lot of time to create a quality newsletter, and I don’t want to publish something that I can’t stand behind and haven’t written in its entirety. I’ve flirted with having guest writers but am just not ready for that, yet. My new goal is to publish quarterly with (hopefully) valuable high content issues.

Numbers

I’m at Super Return North America in Miami today and gave a talk yesterday. Hit me up if you’re there!

Link to the presentation is at the bottom of this issue, but I’ll highlight some of the key points before you get to that. If you just want the presentation — skip to the bottom.

Before you criticize the brevity, I wanted to hit some major points during a limited window to help families avoid the slop that is the vast majority of the venture ecosystem. It’s my job as a speaker to educate.

The presentation was titled “Being the smart money in venture” and I focused on LP positions considering the limited time, hopefully if I’m invited back I can cover co-invest and directs at a future event.

Highlighting Key Points

If you don’t want to check out the presentation (It may be hard to follow without me talking through it), I’ll highlight some of the key points. I assume that my readers understand that the fund landscape for Venture Capital actually consists of many unique strategy and portfolio construction differentiated asset classes with differing profiles, but when painting in broad brush strokes, it’s two asset classes. The emerging managers, and the asset gatherers.

Emerging Managers Outperform

1) Less than 20% of Funds within the cohort I compiled on Pitchbook, consisting of venture funds with a vintage 2010-2016 and including only those who have shared performance data, hit a 3x TVPI. In that same dataset just 10.8% of large funds ($250m) hit that number, while 10.1% of small funds hit the higher 4x TVPI threshold.

Emerging mangers provide better performance — we all knew it, but the data proves it.

Marketing is Bullshit

2) Manager marketing is, much like the market, mostly slop. It doesn’t differentiate or inform. It serves to provide false hype based on meaningless metrics. But, you can sometimes gain insights about what a VC is NOT telling you, based on their marketing.