The Full Ratchet (TFR): Venture Capital and Startup Investing Demystified
Investor Stories 352: Disruptive Forces (Jensen, Edelson, Tunguz)
Jun 13, 2024
Guests Larsen Jensen, Alex Edelson, and Tomasz Tunguz discuss disruptive forces in the VC industry, including bifurcation in funds, challenges for generalist funds, sourcing strategies, value and index investing trends, and the impact on startups and the VC landscape for the next decade.
05:14
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Quick takeaways
- The VC industry is split between mega funds and sector specialists, resembling the Walmart/Amazon effect, impacting firms in the middle tier.
- The rise of value and index investing in venture capital could lead to the emergence of index funds, mirroring the distortion in public markets.
Deep dives
Bifurcation of VC Industry
The VC industry is experiencing a notable split due to the amount of capital influx. On one side, there are large scale mega funds offering investments at any venture stage and vertical. This resembles the Walmart/Amazon effect. On the other side, there are sector specialists focusing on expertise in a particular area like Gucci or Tiffany, creating a distinct market presence. This bifurcation trend is expected to continue, affecting firms in the middle tier that lack specialization and struggle to differentiate themselves.
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