>complete dunces
You've probably got to be quite bright academically to get in but if you look at how their compensation works they mostly get a cushy job with a high salary paid for by a 2%/year or so charge on funds invested. Performance fees on exit are years away. So if they can say to investors "we're in all the hot starups like color.com" it works if the investors throw in billions even if the startups are disasters. So they may be dunces at understanding startups but are probably quite good at their core business of fund raising.
Re:The Quickest Way to Understand VC
by ivankirigin on Monday April 18, 2016 @12:46PM
(#11521269)
Fundraising for funds is actually pretty hard. Founders that do it tell me it's harder than fundraising for your startup because LPs are stodgy.
With the exception of a handful of partners at a handful of firms (nothing but respect for a16z here), they are all complete dunces, and they don't have the slightest clue what they are doing. This article is right that they are going for the biggest possible outcomes, but it misses out on the largest and most exploitable quirk of the VC industry: that they're all chickenshit. They wont invest unless someone else does, thereby validating their decision to invest.
The most effective cold pitch I've ever seen at our fund involved what was to me a completely obvious lie about outside interest. I met the guy after I left and he basically confirmed that he pulled the same stunt at all three of the firms that invested. He worked them in rotation, building actual interest off of what was initially fake interest. And it worked like a charm.