Four Points About Venture Capital, Discussed on a Train

Originally published 2021-04-02Robin’s commentary

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English translation of the Chinese post originally published 2021-04-02. Translated 2026-10-27 with AI assistance. Historical figures and claims have not been updated or independently verified. 中文原文

Reading guide

While taking a train with his child, Robin shares four observations on venture capital and recommends Da Ying’s Taiwan VC guide. First, high returns come not from bearing high risk but from enabling change: new technologies and models replace old ones. Second, VC is a special, disproportionately small form of private fund because genuinely transformative innovation is scarce and needs relatively little capital; excess inflows can create bubbles. Third, the limited number of practitioners and amount of capital contribute to the industry’s mystique. Fourth, the ideal investor applauds from the audience after investing. Deals requiring aggressive intervention or even a coup to remove the founder mostly end in failure.

Key points

High returns come from enabling change, rather than simply bearing risk.
VC’s small scale is normal; excessive capital can create bubbles.
A limited number of practitioners contributes to the industry’s mystique.
The ideal venture investor applauds from the audience.

Trees at different stages of growth with connected roots on cream paper, suggesting patient cultivation and lasting value. — Venture capital & investmentThematic illustration · AI generated

Full text — English translation

While taking a train with my little one, let me say a few things about venture capital. If interested, take a look at Da Ying’s (達盈) Taiwan VC guide. A few interesting points: 1. VC generates high returns not because high risk earns high returns, but because its essence is enabling change: new technologies replace old technologies, new business models replace old ones, and new industries replace old ones. Change brings remarkable returns. 2. VC is a very special form of private fund, disproportionately small relative to equities, bonds, foreign exchange, commodities, and real estate. The key is that genuinely innovative things capable of creating change are rare. Large-scale new innovation cannot keep emerging continuously, so relatively little capital is needed. A large influx into VC may create a bubble. 3. Given points 1 and 2, VC occupies a distinctive place in financial markets. The relatively limited number of practitioners and amount of capital create its mystique. 4. Finally, ideal venture investing requires little management after investing: you are an audience member applauding from below the stage. A deal requiring active VC intervention—even a conspicuous coup to oust the founder—will more often end in failure.

These articles are personal notes, book excerpts, and collected reprints. Figures and events reflect the time of the original publication, are not current information, and do not constitute investment advice.

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