Why VCs Explaining “It Was Only 4% Of Our Fund” Is Misleading Minimization When a High Flying Startup Implodes

As MultiBillion Dollar Private Companies Shrivel, What Their Investors Aren’t Saying About These Losses

Hunter Walk
4 min readNov 28, 2022


As more high-flyer private companies find their shine tarnished, investors (or adjacent VC-explainers) remind us that it’s unfortunate but actually a non-issue, so please, let’s move on and not rubberneck the pileup. Wait, what? Losing tens of millions of dollars (or more) is no big deal? Don’t people get fired for that?

The basic math suggests they’re, well, correct, at least if you’re just looking at first order impacts. In most cases, any single company represents a very small percentage of a venture fund’s total size (hold aside this is also because firms have been increasing their AUM at astonishing velocity). In fact, losing money on a meaningful percentage of startups isn’t just expected, it’s potentially evidence that you’re taking enough risk to hit some of the power law winners which will pay back your LPs many times over!

As cofounder of an early stage venture fund myself, I’m here to tell you that while these statements are accurate, they’re also misleading when trying to understand the broad impact these implosions may have upon a firm. Before you start tweeting ‘Man in the Arena’ quotations to me, my experience here isn’t limited to sideline punditry — although Homebrew has yet to be involved in any Unicorn->Zero events, I can think of two investments where we were “all in” across the seed, A and B rounds, only to see the companies ultimately return 0x, losing us almost $10m combined.

giant pink pencil eraser rubbing out a unicorn, digital art [DALL-E]

So when a venture firm tells you a previously high valued investment’s failure is NBD, here’s the checklist of implications that’s not always apparent to outsiders, ordered subjectively from least enduring to most calamitous.

Reputation Effect. Highly qualitative but a firm’s brand can be tarnished by their cheerleading and then awkward distancing from a deadicorn. Personally I believe these are great opportunities to ‘learn in public’ and distinguish oneself with how they might support impacted employees, and other bystanders. Others believe they’re moments to silently…



Hunter Walk

You’ll find me @homebrew , Seed Stage Venture Fund w @satyap . Previously made products at YouTube, Google & SecondLife. Married to @cbarlerin .


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