Venture Capital Is Ripe for Disruption

The best example of this alternative product is Indie.VC, run by Bryce Roberts. Over the course of 6 years, Indie invested in 40 companies. It held the two key components of limited fund size and gave equity optionality through redemption clauses or equity buybacks. The results are encouraging, with a 51% IRR and 4.3x TVPI, while 87% of the compani... See more

A capital allocator would need to have two things happening simultaneously.

1. Limited fund size: The fund would need to be $150M or less, or otherwise, you’ll be back to being wholly subject to the power law.


2. Equity optionality: Investors in a startup utilizing this product need to be able to get returns even if the outcome is smaller. That would req

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This is never how it actually happens, but you get the idea. Startups should receive risk capital to literally derisk certain aspects of the business.

However, over the last decade or so, something shifted. Traditional venture funds that specialized in early-stage risk started to add buckets of “growth equity” that were supposed to be utilized for ... See more