It’s a good point about tech in general but not particular regions. Regions have died as tech hubs before after a few cycles of ups and downs. It happened to NY, it happened to Detroit.
Housing undersupply and financial oversupply are 2 structural indicators.
It takes time to invest, and finding the same return rate for a larger pile of $ over the same horizon takes longer. So larger deals are oversubscribed and smaller ones get starved.
Think “smart money”. If a single VC is deploying 1B instead of 100mm, each $ is 1/10th as smart
That's a risk factor for individual startups and VCs, but the smaller ROI from pumping ecosystems w/more money doesn't imply that larger ecosystems are worse. Companies w/dumb money die, but ultimately generated consumption, grew the local economy, etc. The effect is ambiguous.
Doesn't the evidence show that smartness of investment isn't all that important, just quantity of bets made?
Intuition says that more capital means:
- less overhead/dollar
- more risk-tolerance
--> more returns