Proof: Group-think a Dominant VC Trait

12 thoughts on “Proof: Group-think a Dominant VC Trait”

  1. It is unfortunate that this myth about lemmings blindly following each other over a cliff persists in society despite the many times it has been shown to be false.

    It however is not false that VCs seem to suffer from severe group-think, not much different from traditional stock market investors.

    Are they any different from the many people who buy things just because the item is popular? It seems that we humans suffer from group-think naturally.

  2. While the lemming reputation may be well earned, I don’t think your comments about ‘hunkering down’ are fair. Truth is that many GP’s are not sure of the posture of their LP’s, and their ability to fund ’09 commitments. Till they do, it would be foolish to invest at the same pace, when your fund may suddenly be 30% smaller. It is also logical (though unfortunate) that the earliest stage investments would be hardest hit; as this asset class has the least amount of capital predictability.

  3. The whole industry is guilty of group think. Regularly.

    So while I agree that VCs are guilty from time to time, I’m not sure that this is the case here.

    Given how much capital has been erased from the economy, its easy to see how in absolute terms there is going to be less of it available for VCs to disperse. Regardless of what happens to VCs relative access to free captial, the pie has shrunk by enough that there is going to be less available to invest.

    And given the way on line advertising is looking for next year I would think twice about putting money into some advert centric business model – clean tech might well look more attractive.

    Let’s wait and see, but I dont think the projections are wrong. And when you’re right its hard to tell the difference between group think and good decision making.

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