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A16Z is re-registering as a financial advisor, renouncing its status as a VC

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Re: A16Z is re-registering as a financial advisor, renouncing its status as a VC

#251

Post by thinkmassive »

navigatesol wrote: post #186
chrisco255 wrote: post #50

Skepticism might be warranted, but it should be noted by now that decentralized finance has a place in the present and future of our planet and it's not going away. I strongly encourage technologists to keep an open mind and do in depth research into the space. Yes, 2017 was over-hyped. The tech was not mature then, and while it has matured some since then, there's still quite a ways to go. Bitcoin Lightning network…

> You don't have any freedom if you have to beg VISA or PayPal for permission to spend your money. That alone should be enough to justify the existence of block chain technology and we should all be cheering on its eventual success. Where is it you live that Internet service is provided by a free market, that can't be disabled?

Most of the inhabited Earth actually... https://blockstream.com/satellite/

Re: A16Z is re-registering as a financial advisor, renouncing its status as a VC

#252

Post by pbreit »

mattnewport wrote: post #248

The investment returns on the funds sounded unimpressive given the time period. I found some info online from the WSJ suggesting the first fund was on track to return around 250% since 2009. Just investing in the NASDAQ would have returned over 500% over that same period. Am I missing something here or is the performance as unimpressive as it appears?

The article itself includes: "The firm’s first and third flagship funds, $300 million and $900 million, respectively, are already expected to return five times their money to investors, sources say. Its $650 million second fund and $1.7 billion fourth fund are expected to return three times their investment capital, good for the top quartile of firms, and are expected to climb."

Selecting the NASDAQ in 2009 is a bit of a cherry-pick.

Re: A16Z is re-registering as a financial advisor, renouncing its status as a VC

#253

Post by defen »

mattnewport wrote: post #248

The investment returns on the funds sounded unimpressive given the time period. I found some info online from the WSJ suggesting the first fund was on track to return around 250% since 2009. Just investing in the NASDAQ would have returned over 500% over that same period. Am I missing something here or is the performance as unimpressive as it appears?

I had the same reaction. I've gotten better returns than A16Z over the same time period just through index funds and picking stocks of companies I like. Granted, I'm investing a tiny fraction of the amount they are, and I don't get to be a mover and shaker in Silicon Valley, but I was really not impressed by the overall return on investment.

Re: A16Z is re-registering as a financial advisor, renouncing its status as a VC

#254

Post by caprese »

engineerworks wrote: post #230
jakequist wrote: post #65

tl;dr - A16Z is reclassifying themselves as an "investment advisor", which will allow them to make riskier bets (crypto, real estate, etc). They'll still invest in startups like any other VC firm.

But imagine, if you are a VC and you invest in a Brothel then you risk your reputation etc... But if you act like an advisor for Mr. Evil Money, then it's not you who is on the hook, right? Basically, it means they want to do something more aggressive and risky and maybe the opportunities in VC space are disappearing.

still surprised I haven't seen any revenue shares of those kind of businesses on the blockchain, ever since 2013's crypto-securities bonanza

either the revenues are that high such that nobody has a desire to sell some of the company, or there is a language barrier in the host jurisdictions where these can legally operate, or nobody has considered it as the incumbents are so comfortable with their licensing/turf that they don't need to change a thing

the technology is so much better now than 2013 and nobody calls them crypto-securities anymore, it is such an obvious use case for price discovery, liquidity, and acceleration of public policy

Re: A16Z is re-registering as a financial advisor, renouncing its status as a VC

#255

Post by ibarea277 »

mattnewport wrote: post #248

The investment returns on the funds sounded unimpressive given the time period. I found some info online from the WSJ suggesting the first fund was on track to return around 250% since 2009. Just investing in the NASDAQ would have returned over 500% over that same period. Am I missing something here or is the performance as unimpressive as it appears?

VC has historically done slightly better than the stock market, but returns over any time period are inversely correlated with how much money is flowing to VC (ie when everyone wants a piece of the action more bad deals are done, terms are better for companies etc) - so you'd expect the current period to produce okay returns (but probably less than the S&P). People imagine VCs return 100x or something, but if that really happened it would reveal an absurd amount of under-investment or really bad negotiating by founders.

And given that these reasonable but not stellar returns put them in the top quartile (and VC has high variance even relative to hedge funds), you can guess how well things have gone for other folks.

Re: A16Z is re-registering as a financial advisor, renouncing its status as a VC

#256

Post by tixocloud »

ar7hur wrote: post #49

a16z ("our" partner was Chris Dixon) led our seed round at Wit.ai. Working with them on a day-to-day basis was an incredible experience. They never asked for anything, but were always ready to jump in instantly when we needed anything from sales intros to offices in Palo Alto. When we got an offer from Facebook we founders wanted to accept it. They initially disagreed with us, but once we confirmed our decision they…

Great note to hear that there are legitimate VCs like a16z who aren't just after their own interests. Did you work with other investors as well? If so, would love to contact you privately regarding your experiences as I'm looking to fundraise soon.

Re: A16Z is re-registering as a financial advisor, renouncing its status as a VC

#257

Post by mattnewport »

pbreit wrote: post #252
mattnewport wrote: post #248

The investment returns on the funds sounded unimpressive given the time period. I found some info online from the WSJ suggesting the first fund was on track to return around 250% since 2009. Just investing in the NASDAQ would have returned over 500% over that same period. Am I missing something here or is the performance as unimpressive as it appears?

The article itself includes: "The firm’s first and third flagship funds, $300 million and $900 million, respectively, are already expected to return five times their money to investors, sources say. Its $650 million second fund and $1.7 billion fourth fund are expected to return three times their investment capital, good for the top quartile of firms, and are expected to climb." Selecting the NASDAQ in 2009 is a bit…

I don't think selecting the NASDAQ in 2009 is a cherry pick given that is when the first fund started and we're talking about a tech focused fund. Even if the numbers here are more accurate than the WSJ, that still indicates the first fund is returning on par or slightly below what investing in the NASDAQ would have done over the same time period.

Re: A16Z is re-registering as a financial advisor, renouncing its status as a VC

#258

Post by stale2002 »

notyourday wrote: post #193
stale2002 wrote: post #181

Earlier quoted context omitted.

Censorship resistant financial transactions. It is much more difficult to censor crypto payments than it is to censor credit card, paypal, or bank transactions. Crypto payments being censored just isn't something that is happening, even though crypto has been around for 10 years. The evidence proves that it is more difficult to censor.

Only in a separate digital realm that never touches the rest of the world. In the rest of the world there are laws that are enforced by force and no amount of math is going to prevent a SWAT team from dragging a crypto punk into a slammer.

Censorship is something that can be done by both the government, and private companies.

It is something that happens with or without a court order, to people who have broken zero laws. Yes, the government often censors perfectly legal financial transactions, to people who aren't criminals.

And crypto makes such censorship against people who have broken zero laws, much more difficult. It makes it no longer as easy as just calling up a bank, or a couple credit card companies, and telling them to cancel all of their transactions to people who didn't commit any crimes.

It makes it no longer as easy as a couple monopoly companies making a quick agreement to screw over an entity that didn't do anything illegal.

Re: A16Z is re-registering as a financial advisor, renouncing its status as a VC

#259

Post by tixocloud »

malgorithms wrote: post #232
ar7hur wrote: post #49

a16z ("our" partner was Chris Dixon) led our seed round at Wit.ai. Working with them on a day-to-day basis was an incredible experience. They never asked for anything, but were always ready to jump in instantly when we needed anything from sales intros to offices in Palo Alto. When we got an offer from Facebook we founders wanted to accept it. They initially disagreed with us, but once we confirmed our decision they…

a16z - also Chris Dixon - led our round at Keybase. We only have great things to say about both the firm and Chris. Chris sits on our board and has been a class act the whole time. Also: during our fundraising, we faced a number of the "Monday pitch meetings" -- this is where you've gone through the early crap talking with VC's and are invited in to pitch to the partners. It's typically the last step before an offer.…

Did you guys ever eventually work with VC firms who didn't understand your product? I get a sense that there might be a big mismatch but wonder how much that really affects things day to day.

Re: A16Z is re-registering as a financial advisor, renouncing its status as a VC

#260

Post by mattnewport »

ibarea277 wrote: post #255
mattnewport wrote: post #248

The investment returns on the funds sounded unimpressive given the time period. I found some info online from the WSJ suggesting the first fund was on track to return around 250% since 2009. Just investing in the NASDAQ would have returned over 500% over that same period. Am I missing something here or is the performance as unimpressive as it appears?

VC has historically done slightly better than the stock market, but returns over any time period are inversely correlated with how much money is flowing to VC (ie when everyone wants a piece of the action more bad deals are done, terms are better for companies etc) - so you'd expect the current period to produce okay returns (but probably less than the S&P). People imagine VCs return 100x or something, but if that re…

It seems like reasons you might invest in a VC fund could include portfolio diversification (if returns are counter cyclical or have low correlation with other asset classes), risk profile or expected performance. It would seem a little surprising if tech focused VC funds had low correlation overall with the NASDAQ but maybe it's the case. If it's mostly about risk profile and VC is riskier then at least according to traditional theory it ought to outperform the NASDAQ over a good period for tech like the last decade but would underperform in a down cycle.
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