Charlie Munger Slams Venture Capitalists — Is He Right? The Truth About VC Returns
“To hell with them”.
This is what legendary investor Charlie Munger, now 99, thinks about venture capitalists.
In an episode of the Acquired podcast (one of our top 15 VC podcasts), Munger was unreserved in his assessment.
“You don’t want to make money by screwing your investors, and that’s what a lot of venture capitalists do.”
“You really shouldn’t be in the business of charging extra unless you really are going to achieve very unusual results”.
He then took a swipe at the personalities the industry attracts.
“Of course, it’s more easy to pretend that you can get good results than actually get them, and so it attracts the wrong people.”
But it wasn’t all bad.
He did have some complimentary things to say about Sequoia Capital (which has gotten a piece of more home-run deals than any other VC firm in history).
He called Sequoia “the most remarkable investment firm in America”, and that the firm would “run rings” around him if he ever competed in the startup game.
So, what do you think?
Does he have a point?
Is he too far removed from the startup game to truly appreciate its nuances?
It’s orders of magnitude harder to pick early-stage deals where limited financial information exists relative to, say, a publicly traded company.
Heck, oftentimes early-stage businesses are yet to settle on a product, business model, or go-to-market strategy.
But the reality is, as we’ve pointed out previously, the best VC brands get the best deals, and with that, capture most of the returns.
According to Cambridge Associates, top quartile funds generated market-smashing returns for the period 2009–18, below.
But you would have been better off putting your money in a low-fee Vanguard S&P index…