Thread by @sajithpai

This is a v good essay by @athomasq on 'Minsky Moments' = when capital inflows lead to reduction in perceived risk (true risk remains). He posits a Minsky Moment in venture similar to the one that impacted the credit markets in '08-09.

pivotal.substack.com/p/minsky-momen…

This is a clever piece of writing by @athomasq - the observation on time acceleration in VC is brilliant.

I am skeptical though if there will be a severe venture winter (ofc my job requires me to disbelieve in it!) because of how true & perceived risk interplay in venture.

One factor @athomasq doesn't consider is reflexivity in venture.

Valuation -> value in venture. Money going in leads to a reset of perception, attracting talent, sucking money away fm competition, leading to true value.

Perceived low risk -> true lower risk, strangely, in VC.

That said, some of what @athomasq said is likely to happen. Timelines are likely to lengthen between rounds, & the pacing will slow down.

You may also see some zombie companies, delaying down rounds to become the living dead.

Also, trivia. I encounter @athomasq after 20+ yrs. We last met at a quiz in IITB where my team came 2nd to his. He was v good ofc. I heard later that he cracked 800 in GMAT (4th or 5th in the world) & joined a Japanese hedge fund.

Now, this!