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A venture capitalist explains why retail investors lose money in startups. Only 1 in 67 companies generate real returns, and VCs hoard the best deals for themselves. His own best investment returned 12× and still didn't make him money overall.
A venture capitalist explains why retail investors lose money in startups. Only 1 in 67 companies generate real returns, and VCs hoard the best deals for themselves. His own best investment returned 12× and still didn't make him money overall.
VC is such an old boys club. They all get together, they're seed funds that invest in the very best companies. They get their buddies to invest in the Series A, and they already have the Series B lined up well before they even get the Series A locked down. We have this hero culture around startup investing, and everybody wants to be in the next unicorn, but retail investors don't actually have access to those unicorns. When I talk about the 1 in 67 that you have to invest in, 2 of those companies are gonna return the entire portfolio. For a retail investor, that's actually probably not true. They don't even have access to the 1 or 2 that are going to go 1,000x and return that portfolio. And I think my best return thus far is a 12x and basically made the portfolio break even, but it didn't even create a return. We just don't understand as retail investors, it's not starting the next unicorn. And unless you have those in your portfolio, you're probably likely to lose money.
