A Minsky Moment for Venture Capital? (ft.com) 24
Venture capital returns have puked this year. The next dangerous stage is investor outflows. Financial Times: Back in the halcyon days of ... early 2021, it looked like venture capital was the hottest game in town. Hedge funds were piling in. Even private equity firms were getting involved in early-stage company investing. Investors loved the combination of fat returns and the lack of volatility in private markets. But the VC cycle now looks like it has hit a sudden stop. Refinitiv's venture capital index, which uses the performance of individual VC portfolios and listed stocks to mimic the performance of the broader industry, tanked another 24.2 per cent in April, taking its 2022 loss to a comically bad 45.8 per cent (NB, the Nasdaq is "only" down 19.7 per cent YTD).
That is comfortably its worst monthly performance since worst of the dotcom bust two decades ago. Of course, a lot of venture capital funds are unlikely to be marking down their books to anywhere near these levels. Some may just be doing better than others (performance persistence is higher in VC than in any other investment industry), but the advantage of private market accounting and negotiated and infrequent funding rounds means that valuations and returns can be massaged a little. There might even be a bit of schadenfreude at the pain suffered by Tiger Global lately, which many venture capitalists saw as an annoyingly uppity interloper-dilettante in Silicon Valley. But the reality is that the bottom has dropped out of tech stock valuations lately -- both public and private -- and anyone who is not marking down their positions heavily might actually unnerve investors more than assuage them.
That is comfortably its worst monthly performance since worst of the dotcom bust two decades ago. Of course, a lot of venture capital funds are unlikely to be marking down their books to anywhere near these levels. Some may just be doing better than others (performance persistence is higher in VC than in any other investment industry), but the advantage of private market accounting and negotiated and infrequent funding rounds means that valuations and returns can be massaged a little. There might even be a bit of schadenfreude at the pain suffered by Tiger Global lately, which many venture capitalists saw as an annoyingly uppity interloper-dilettante in Silicon Valley. But the reality is that the bottom has dropped out of tech stock valuations lately -- both public and private -- and anyone who is not marking down their positions heavily might actually unnerve investors more than assuage them.
Vulture not Venture please (Score:2)
These leeches deserve every bit of bovine excrement that flies in their direction.
I'd like it that anyone telling the world that they are a VC gets not only run out of town but out of state and told never to return. J.D. Vance are you listening?
Your career is well past its 'Sell By Date'. Time to start pushing that broom in the corner diner.
Reminds me of 2007 (Score:5, Insightful)
Remember back in the day when we were told, "This time it's different" as Goldman Sachs, J.P. Morgan, et al were furiously using debt to buy more debt? Remember when we were told mark-to-market was passe and not to worry because everything was under control?
If these VCs are not doing mark-to-market, for whatever reason, it's a virtual guarantee the same thing will happen now which happened in 2007.
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Any idea what the reference to " Minsky Moment" is?
My mental process went: ...
Minsky Moment => Marvin Minsky => Marvin the Martian => Earth-shattering KABOOM!
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'Boom Bust Boom' explains it. For Monty Python fans. https://www.imdb.com/title/tt3... [imdb.com]
Hyman_Minsky https://en.wikipedia.org/wiki/... [wikipedia.org]
Minsky_moment https://en.wikipedia.org/wiki/... [wikipedia.org]
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Any idea what the reference to " Minsky Moment" is?
https://www.investopedia.com/t... [investopedia.com]
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I think it's when you're balls-deep in a child sex slave provided by the same guy who's funding your research lab and you finish in her without ever realizing that she's a child or that it wasn't consensual.
Return to the mean? (Score:3)
Read Corey Pein, "Live Work Work Work Die" (Score:5, Insightful)
They quit funding excellence in product development some time ago. The business model in recent years has been to "dominate a space" (food delivery 'space', online tax 'space', etc) - monopolize a service. And that the monopoly is most-simply bought, by just heavily funding one player to take out the others.
F those guys.
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Witness what happened to Uber. They tried to artificially “dominate the space” by pouring $$ into ride sharing. For a while, rides were cheap. Until the investors tired of bleed
WTF is a "Minksy Moment"? (Score:2)
Nothing explains it in the summary, and TFA is paywalled, and I'm not signing up for anything there.
About the only thing I can think of is that is somehow related to some prediction Marvin Minksy made about AI.
Re: WTF is a "Minksy Moment"? (Score:3)
Re: WTF is a "Minksy Moment"? (Score:4, Informative)
Stability breed instability. I don't agree it's a Minsky moment since these companies were all extremely "volatile" when prices went up. Problem is that people only complain when things go down in price.
After googling that quote I realized that the concept is attributed to the economist Hyman Minsky [wikipedia.org] and has nothing to do with the computer scientist Marvin Minksy [wikipedia.org]
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https://archive.ph/DLqix [archive.ph]
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https://archive.ph/DLqix [archive.ph]
Sorry .. I don't open random link shortners on public forums
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Those archive sites are legit and bypass nearly every paywall. I use them a lot.
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Those archive sites are legit and bypass nearly every paywall. I use them a lot.
Trust me, I'd never lie to you.
Says every scammer etc ever
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https://en.wikipedia.org/wiki/... [wikipedia.org]
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or, better: https://en.wikipedia.org/wiki/... [wikipedia.org]
I Didn't Know (Score:4, Informative)
https://www.investopedia.com/t... [investopedia.com]
Minsky Moment refers to the onset of a market collapse brought on by the reckless speculative activity that defines an unsustainable bullish period. Minsky Moment is named after economist Hyman Minsky and defines the point in time where the sudden decline in market sentiment inevitably leads to a market crash.
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The entry has the usual links and references for further inquiry.