Things have finally been starting to make sense to me in the market. Empires are falling. My news feed is full of articles consisting of big portfolio markdowns, angry LPs, and leveraged crypto companies conducting fraud.

Tiger Global- the firm that attempted to index late-stage venture, has marked their book down -8% TVPI. This is quite pathetic, considering how inflated TVPI numbers are. If I was to guess, the actual value of their book is around -20%. Sequoia LPs that once gave unwavering support to the top decile performer are now grumbling about the loss of FTX, and the judgment for backing is known WeWork fraudster, Adam Neuman. I would be remiss not to mention the $2B of venture dollars lost with FTX- the stadium-naming crypto exchange that, without any governance, got caught co-mingling customer deposits on the exchange with another entity owned by the founder that was a highly levered hedge fund – Alameda Research.

Back in 2020 when I almost invested in a crypto hedge fund called MultiCoin Capital. FTX represented 10% of MultiCoins fund. I passed on the fund because it had no investor-preferred return, which is pretty standard for the hedge fund industry. The response was- “we don’t need to provide a preferred return when we are triple-digit IRRs.” Oh, have the mighty fallen.

I am not getting pleasure in the billions that have been lost in shareholder money, but I do feel comfortable that things are normalizing. Cash is getting noticeably tighter in the private markets. Investors are getting more power back, which means greater returns for the risk they are taking. Company governance will also be way back in 2023.