54 sats \ 3 replies \ @039e7a238d 17 Jun \ parent \ on: Ego Death Capital? bitcoin
Sure. That's not enough though. Just beating bitcoins performance as a VC fund is hard enough. Now imagine you need to beat 3x (or whatever you consider same risk as your start-up portfolio) leveraged bitcoin performance.
Most of bitcoin start-ups rely heavily on bitcoin succeeding, so both the leveraged bitcoin and the bitcoin fund are dependent on that.
If your benchmark is a generic tech VC-fund then, maybe, you may be able to beat the benchmark (if and when bitcoin continues to grow).
That's stupid. With 3x leverage you will probably get liquidated to 0, not a good benchmark. 1.1-1.2x is a fair benchmark.
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That's the point. With start-ups you probably also get liquidated.
That said, you should obv. adjust your benchmark leverage according to the risk profile of the fund (/start-up).
So. For example, if you invest into a single start-up, you should probably get a 90% failure rate. A simple approximation for leverage would be to check the historical price chart of bitcoin and see what kind of leverage will not get liquidated 10% of the time (historically). You can do other approximations as well.
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Thanks for the insight.
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