The VC Business Model: Pareto Driven to Extremes

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The VC Business Model: Pareto driven to extremes

Virtually all venture capitalists agree that only a very tiny fraction of their targets accounts for the positive overall return of their funds, while most investments produce either no significant contribution or even result in complete losses, thus producing negative effects on fund returns. Depending on the individual fund, alternative target industries, investment stages, regional priorities, etc. the statistics vary, … Read More

Risk Mitigation in the Venture Trade (Part 3): Markowitz does not Work

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Markowitz does not work in the venture trade

I guess (in the course of my two most recent blogs) I have made my basic stance clear that standard portfolio theory fails as far as start-up portfolios are concerned. Let us, just for the sake of the argument 😉, assume Markowitz’s paradigm could somehow be applied, or rather, transferred onto the start-up stage. What would it look like? I … Read More