Gurley claims venture's outperformance depends entirely on tiny frothy windows; without peak years it's an uninteresting asset class.
“And if you don't, if you aren't around for that part, you know, you strip those years out a forty year assessment, it's actually not that interesting an asset class,”
Gurley notes Adept raised $415M and argues such acqui-hire structures cannot generate portfolio returns for VCs.
“I mean, we need to be realistic. Like if you're a venture capitalist and every one of your deals turned into one of these weird human acqui hires with a licensed deal back, you're not going to generate a return for your portfolio. Like, it's best case, you're this company had raised $415,000,000”
Gurley calculates five-year delay requires $160 return versus $100 due to 15% cost plus 5% dilution.
“That's the risk free rate. It's 15. And then it's 20% a year. 15 plus the five from the equity dilution.”
Gurley calculates five-year delay from year ten to fifteen requires $160 instead of $100 just from compounding cost.
“Let's say you were expecting to get a $100 back from investment in year ten and you wanna delay it to year fifteen.”