Why Money-Losing VC Funds Persist Despite Aggregate Losses in the Venture Capital Asset Class

Jason Lemkin explains that despite most venture funds failing to return capital in aggregate, LPs continue investing in VC because top-performing funds can achieve 8-10x returns, significantly outpacing other investments. LPs mitigate risk by diversifying across multiple funds and accepting that some losses are necessary to access outsized returns. Success often depends on identifying one exceptional partner with proven track record rather than overall fund performance.