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Ask HN: When a VC loses money, how does that affect the rest of its portfolio?

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Re: Ask HN: When a VC loses money, how does that affect the rest of its portfolio?

#21

Earlier quoted context omitted.

It's not the morals I'm wondering about; it's the viability of the businesses. Investing in one of these companies is hoping you can cash out before the bubble pops. At least if you invest in a boring SaaS company, when the bubble pops, you might still have a boring SaaS company on the road to profitability.

If an exchange isn't misappropriating customer funds, it doesn't matter if the bubble pops. They facilitate transactions and take a fee in return. As long as they have customers and don't blow money all over the place, they should be profitable.

Risk management for traditional derivatives is hard, risk management for crypto derivatives is almost impossible.

Even if "exchange" doesn't misappropriating customer funds, the customers themselves can easily become insolvent in a moment, and then it will cascade to every other market participant.

Re: Ask HN: When a VC loses money, how does that affect the rest of its portfolio?

#22

In a VC portfolio there is little difference between a 0x or a 3x return. Virtually all the returns come from the handful of 100x returns that make the entire fund. All the other companies combined have little impact Side note that the 3x return companies are the biggest headache to manage (founder feuds, recruiting another vp of sales, etc). The 0x and 100x companies are much easier

yep this is what sam altman calls the power law, your most successful investment is greater than your 2nd and rest combined, keeps going on like that.
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