Where Venture Capital Is Broken

In his interview with Reed Albergotti, Social Capital founder Chamath Palihapitiya didn’t mince his words when describing why he is transforming Social Capital into a tech holding company (aka he wants to “flush” out bad investors). He was also quite blunt in his analysis of what is wrong with venture capital.

The summary of his critique is that venture capitalists aren’t fully aligned with entrepreneurs because they are professional money managers who are basically making broad bets across a whole baskets of companies like an index fund. Entrepreneurs can’t rely on them to always be there.