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6 quotes from 1 episode on How I Invest, each with a timestamped link to the source.
Jack Selby argues the venture capital industry faces a multi-year liquidation cycle because managers failed to distribute returns. Many firms now operate as walking zombies that survive entirely on management fees from their 10-year vehicles.
Poorly performing venture firms exploit 10-year fund lifecycles to survive purely on management fees.
“They're 10-year vehicles, and these venture firms that turn out to be B minus or worse just play the game of manage management fee ventures…”
From Jack Selby Says the Venture Capital Cull Is Only in Inning Two
AI tools lower company formation costs and accelerate revenue so founders generate venture returns without building a trillion-dollar business.
“AI enables companies to be built much more cheaply, achieve revenue much more quickly, get to good outcomes much more quickly, and generate good, if not great, venture capital returns without the fixation of, 'Oh, I have to go build a next trillion dollar company,'”
From Jack Selby on Chasing 500 Million Dollar Exits Instead of Outliers
The industry failed to distribute cash to investors over the past decade, missing the 2021 market peak. Jack Selby notes the asset class is moving through this correction slower than observers expected.
“The industry has done a poor job of returning capital to its investors over the last decade…”
From Jack Selby Says the Venture Capital Cull Is Only in Inning Two
“So, you have a vintage of venture managers that are ostensibly still in business today, but they're walking zombies because they screwed up by not returning any capital to investors at the last cycle peak, which is back in 2021…”
From Jack Selby Says the Venture Capital Cull Is Only in Inning Two
“And I've been wrong about this because I've been pounding the table about this dynamic, and I would have thought if it was a baseball analogy, we would be in the fifth or the sixth or maybe even the seventh inning of this process…”
From Jack Selby Says the Venture Capital Cull Is Only in Inning Two
Investing outside major technology hubs secures larger ownership stakes for less capital. Jack Selby buys 10% to 20% of a non-coastal Series A round for an average $3 million check.
“So, my math is very, very, very different because my entry point is so much less expensive, I can usually buy between 10 and 20% equity in a non-coastal Series A deal for an average ticket of $3 million…”
From Jack Selby on Chasing 500 Million Dollar Exits Instead of Outliers
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