(source: https://www.cambridgeassociates.com/wp-content/uploads/2015/05/Public-USVC-Benchmark-2014-Q4.pdf …)
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But I just made up the 95% confidence interval; investors are not necessarily foolish for investing in VCs that "can't reject the null hypothesis", especially if they invest in a diverse set of VCs that together have a mean growth rate >0.
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The basic overall conclusion is that VC’s as a class make about the same return you’d expect to compensate for their level of risk. This average includes a mix of VC track records, from “no better than coin flipping” to “way above-market returns.”
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Conventional wisdom in the industry is that a handful of firms have “alpha” (a measure of better than chance returns) but that nearly all are effectively investing at random.
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yep, that's what my calculations are showing and it's consistent with this paper's https://www.nber.org/papers/w13056.pdf … estimate that the average alpha of VC is zero.
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The successful VCs are selling credentials and access to their network (YC for example). Lesser VCs are vying to build a brand strong enough to do that too.
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