The common lies VCs and Angels tell themselves revolve around a single theme, that an outlier of innovation can be found with a fishing-net of investor socialism, chock-full of collusion, deal fragmentation, and excessive deal syndication. A grandiose macroeconomic fallacy.
In the words of Einstein: “The thesis determines what can be discovered.”
Reality is that the returns of prime cannot be derived from an investment thesis lodged in subpriming. Outliers, who know no precedent, cannot be found through an investment thesis lodged in uniformity. And the upside of unprecedented foresight, from a new and higher normalization of truth, cannot be derived from an investment thesis hell-bent on downside protection with endless diversification, derived from regurgitation of hindsight. Simply put, one ought not to expect to reap the rewards of prime risk from avoidance of risk.
Indeed, the prevailing model deployed by venture capital and angel investors has become incompatible with finding outliers.
The latter being the macroeconomic reason why investment returns are a crap-shoot and generally poor (despite the massive greenfield available to real innovation), and the reason why innovation-arbitrage must be held directly responsible for the systematic dumbing-down of the very meaning and socioeconomic impact of innovation.
