The 10X Capital Podcast
The 10X Capital Podcast is a podcast that interviews the world's leading institutional investors. Previous guests include The Ford Foundation, Northwestern University Endowment, CalPERS, Stepstone, and other top limited partners.
E9: David Clark | Investment Director at VenCap on What Every LP Gets Wrong About Power Laws
David Weisburd sits down with David Clark, Investment Director at VenCap International PLC to discuss his viral post about power laws in venture capital, manager predictability, adverse selection in VC, and what percent of startups go to zero. If you’re ready to level-up your startup or fund with AngelList, visit www.angellist.com/tlp to get started.
Key Points
- Over 30 years, Vencap International has found that a small group of managers within their 110 backed consistently outperform by finding companies that return the entire capital of the fund, indicating past success as a strong predictor for future fund returners.
- Despite the high number of emerging managers and small funds, the predictability of their performance is lower compared to established managers, where about 50% of the funds from Vencap's core managers are top quartile and less than 10% are bottom quartile.
- Vencap International maintains a 3-year investment cycle for their funds, emphasizing the importance of time diversity and a counter-cyclical approach to venture capital, where playing defense during hot markets and offense during downturns can lead to consistent outperformance.
Chapters
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| 36:30 |
Transcript
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