my "tin foil hat conspiracy" is that all the talk in tech about startup investing just distracts everyone from real wealth creating opportunities that already exist in public markets that literally anyone can access.
seed investors/VCs/etc are incentivized to discount public equity opportunities because they're trying to prove their own value to their LPs
VC is an industry unto itself, a discrete sport even, and essays like this are defined in terms of that industry: the business of "exits" by acquisition or IPO. Opportunities that anyone can access are thoroughly offtopic.
Frankly, I have to wonder who is the audience for this post.
>Frankly, I have to wonder who is the audience for this post.
I had the same thought. My guess would be founders of "hot" companies. Altman is signaling that he knows all the ways to be a great investor (and presumably puts them into practice).
This is not conspiracy, but it's truth. People who have very little leverage or access to superior deal flow should NOT be investing in startups, which, with very few exceptions, provide minimal, if any returns.
I plowed hundreds of thousands of dollars into startups that I wished I put in more "mundane" investments with better overall returns.
Startup investing is for those who seek:
* Some sort of personal glory
* Delude themselves into thinking it's a high quality investment
* Have had a one-exit "success" and now think they understand everything about everything
* Are in it for the philanthropy - building up "startup ecosystems". No, the next big hit will most likely NOT come out of Cincinatti or Indianapolis. Maybe the odd strike of lightning success, but there's no way to power an ecosystem with a few meager millions of dollars
* Are playing with other people's money
Angel investing is for the foolish or those with some sort of substantial inside edge / track on success that lets them beat the odds.
I'm more thinking more from the perspective of your average tech person who might be considering angel or startup investing. There's a very real "myth" that the only way to strike it rich is to invest in private startups vs public investing.
Your average tech person shouldn't be considering angel investing in my opinion, and should only allocate a small portion of their portfolio to VC. It's under-performed the public market since the late 90s, and I don't think that's going to change any time soon, but it could in theory.
I think there's at least a kernel of truth to the "myth" about public/private investing that you mentioned. You won't become a billionaire working as a software developer and investing in index funds for the next 30 years, but you can if you invest in the next Facebook or Google early enough.
That said, most tech people I know are looking to work at the next unicorn, not invest in it.
Most folks don't realize how simple it is to set themselves up for life if they start investing early and consistently. This is especially true on a "tech" income. This stuff is not taught in school.
Most people who aren’t named Sam Altman will never access the best seed investments. I would’ve invested in Stripe in 2012 too but couldn’t even if I wanted to.
The idea that you can’t find the risk reward is untrue. I’d consider investing in biopharma to be equivalent in risk reward to early stage startup investing. The difference is that these companies go public early because that’s traditionally the only way they can raise.
And if you want to rev up the risk to make 10x-100x you can options trade in the public market as well.
> I’d consider investing in biopharma to be equivalent in risk reward to early stage startup investing.
Similar risk reward, but it seems harder to have any insight into a pharma startup's chances of success. Sure, it is easier to gauge potential market (% of people affected by condition X), but whether they will be able to develop a product is a total dice roll.
it's definitely a gamble...not sure how to necessarily measure whether it's any more or less than early stage tech investing, though. at least your investment is liquid, which is big, and the timeline for trials, readouts, etc. is known relatively far in advance.
you can look at things that an early stage investor looks at like team, hiring, etc. beyond just progress.
IMO this decade will be absolutely massive for biopharma. Plenty of good opportunities, especially for those complaining that the reward is public markets is not as high as early stage.
Both are obviously a gamble, but pharma is more of a black box than tech.
As an investor, I can make an informed option whether there is a market for subscription indoor cycles like an Peloton. I could be wrong, but I can look up the market numbers and weigh them against my personal experience and world view. When it comes to pharma, almost nobody has domain expertise of the subject.
To put it another way, the leading risk in tech is market adoption, while the leading risk pin Biopharma is technical feasibility.
seed investors/VCs/etc are incentivized to discount public equity opportunities because they're trying to prove their own value to their LPs