We lack the data needed to show whether venture capital is performing as an asset class
VCs suck (but there's a way you could prove me wrong) — There has been a bunch of Twitter conversation this week about venture capital economics and performance, stemming from an HBR post titled Venture Capitalists …
Context & Ripple Effects
The fight over whether venture capital actually earns its keep runs on a loop: TechCrunch asked back in March 2007 whether a reckoning was coming for VCs, Paul Kedrosky wondered weeks later if VC bashing had gone passé, and Marc Andreessen countered that June with his own multi-part account of how the business really works. TechCrunch returned in 2010 to tell VCs to take their own advice, and PandoDaily offered a rare defense of classic venture in 2013.
This week's installment started with an HBR post and migrated to Twitter, pulling in Andreessen, Felix Salmon, Tren Griffin, Dan Primack, and syndicated pickups from CB Insights — unusually broad reach for what is ultimately a measurement dispute. The analyst's core claim cuts beneath the bashing-versus-defense framing: the data needed to judge venture as an asset class does not publicly exist, so neither side can actually prove its case.
First-order effects
- LPs weighing new commitments to venture funds have no comprehensive dataset to benchmark performance against other asset classes, leaving allocation decisions to rest on firm reputation and narrative rather than evidence.
- The public exchange among high-profile finance voices puts fresh pressure on general partners to disclose fund-level returns that are currently held private.
Second-order effects
- If LPs cannot verify returns, commitments concentrate further in a handful of brand-name funds whose track records are at least legible, sharpening winner-take-most dynamics in fundraising.
- Demand rises for standardized, independent benchmarks of VC performance — leverage accrues to whichever data provider can make private fund results comparable.
Third-order effects
- Persistent opacity guarantees the credibility question resurfaces on a cycle, and each unresolved round strengthens the case for LP-driven disclosure standards across private markets.
- So long as the measurement gap holds, venture's economic value stays an argument settled in essays and Twitter threads rather than demonstrated in audited numbers.
The trend: Venture capital's performance debate recurs every few years precisely because the asset class's opaque data leaves the question unanswerable — and each flare-up raises the cost of that opacity for both GPs and their LPs.