Bill Gurley

So VC alongside private equity.

Some have private equity a lot bigger, but it's gotten bigger and bigger on their balance sheet.

So it's important.

There's, I think, a lot of questions about this group of companies.

One is, what's their correct value?

A lot of the marks for their last round was set back in 2021.

Yeah, which is when you had a real market peak that second year of COVID.

If you remember, all the tech stocks blew up and Zoom blew up at that moment.

And everyone did really well in that window.

So there's a question as to what they're worth.

The investment world doesn't seem excited about this group of companies, just writ large.

They don't have super high growth rates, and I want to talk about why I think that is.

The thing that most people may not believe, but I guarantee you it's true, no one has an incentive to get to Mark's rank.

For those that don't know this world, private investing, both on the PE side and the VC side, is this weird world where the GPs, the people responsible for the investments, report the price to the LPs.

They get to pick it.

Now there's auditors in the background messing around and you'll hear frustrated LPs because some firms will be conservative and price them low and some high.

So they get mixed signals from different people.

Yeah.

But the thing people may not realize is the managers of the VC group at the large endowments have no incentive to try and right size this number.

In fact, many of them are bonused on paper marks.