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Venture Manager Selection: Capitalising on Arbitrage Windows

jordsnel.substack.com · 2,878 words · saved by 1 readers

Communities dissolve and re-appear, windows are repaired, signs erected, and clubs bloom and fade seemingly each time you visit. Markets are similar things - ideas and money hum along in ebbs and flows around the blocs and squares of opportunity, churning out rich kids and shuttering doors just as quickly. As firms move in and out and people take on more risk to avoid competition, the windows of arbitrage open and close. Some blocs or business models are already quite efficient (e.g. marketplaces). Others have a long way to go (frontier tech). Occasionally there are big gaps. Sometimes they’re caused by some new tech, such as the Bitcoin whitepaper or advent of cloud computing. Sometimes market changes enable them (like Constellation’s VMS strategy and the rise of LBOs in the ‘80s). Sometimes they’re crowd-brain driven (such as the 2008-2011 venture vintages), which allowed for a lot of GPs to ride the convexity inherent in low prices. The ability to adapt to these windows of arbitrage

Desolation, Part 5 in The Course of Empire, Thomas Cole, 1836 Markets age as cities do. Communities dissolve and re-appear, windows are repaired, signs erected, and clubs bloom and fade seemingly each time you visit. Markets are similar things - ideas and money hum along in ebbs and flows around the blocs and squares of opportunity, churning out rich kids and shuttering doors just as quickly. As firms move in and out and people take on more risk to avoid competition, the windows of arbitrage open and close. Some blocs or business models are already quite efficient (e.g. marketplaces).…

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