Gurley states the best downside protection in venture capital is fully capturing the upside.
“the best way to protect yourself against the downside is to enjoy every last bit of the upside.”
Gurley explains venture firms must maximize upside because IRR depends on hot cycle performance, which may accelerate collapses.
“And that's where we came up with this phrase that the best way to protect yourself against the downside is to enjoy every last bit of the upside.”