I Do Not Understand The VC And Investment Side Of Business. Does That Mean I’m Not Good At Business?

No, not at all. With the background information you provided, it means you question authority, an excellent quality to have.

You see, some 99% of VCs do not produce renewable monolithic venture-style returns to their investors, including some of the big-name like KPCB and DFJ. Many of them now waddle in diversified stacked and serial fund structures, not all of them venture, by which they can still finagle and portray success as a firm. In reality, the emperor wears no clothes, a reason why their merit is purposely hidden from entrepreneurs.

Mind you, none of the VCs in Silicon Valley supported Elon Musk in his formative years, even with his success of PayPal under his belt. A testament venture capital has become numb to the risk it is supposed to chase.

The premise of venture capital, applied to the massive greenfield of technology innovation, is substantial. The execution of their self-guided operating-systems (and net-yield to humanity) however, is extremely poor.

Venture capital has turned subprime by virtue of its excessive collusion, deal fragmentation, and syndication promoting socialism, with uniformity of deal intake fundamentally incompatible with finding outliers. Indeed, the SEC should have stopped this scheme years ago, for such collusion eventually led to severe losses to the public in the last of the chain of greater-fools. And because of the lure of venture capital’s sub priming, now anyone with a little bit of money can enter the hollow pageantry innovation has become.

To put it in layman’s terms, the pursuit of innovation worthy of venture-style returns is like producing a Formula 1 race car to win a race and to do so over and over again — fine-tuned risk applied to the upside, combined with smart money yielding big outcomes.

Nowadays, with the massive infusion of dumb money, more grandiose collusion, and cheap arbitrage, everyone building a regular car can easily make the public believe they too have developed a Formula 1 race car. The similarities ending where an ordinary car indeed also has four wheels. Like the formation of a small business now systematically being confounded with the unique upside trajectory of venture-style start-ups. Or Kevin O’Leary of ABC’s Shark Tank now referring to himself as a venture capitalist.

Venture capital started, some 40 years ago, as a unique financial instrument designed to pursue prime risk to promote renewable socioeconomic value. With few exceptions, it has turned into a societal laughing-stock of public deceit — a good reason why you – at least – are and should be wary.

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