FYI: Venture capital is one of the most unique forms of investing in the asset management industry.
The business model is predicated on the fact that the majority of the early-stage investments made by these funds will fail. In fact, multiple failures are expected. The hope is one big winner — a la Google, eBay, LinkedIn, Uber, Airbnb, Facebook, etc. — will more than make up for it.
Relationships also play a massive role in who earns the returns since many of the fastest growing early-stage companies can choose which VC firms to work with.
But with the flood of money into the venture space, investors may have other failures to worry about, namely, that of the VC firms they choose to work with.
Regards,
Ted
http://awealthofcommonsense.com/2018/09/venture-capital-risks/
