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…

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Hunter Walk

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