“Sometimes venture capital firms make irrational financial moves, based on their LP documents,” said J.B. Pritzker, co-founder and managing partner of Pritzker Group in a private breakfast for 80 family offices and venture firms.

He was speaking during a fireside chat with Esther Dyson, hosted by Alpha Venture Partners.

“[VCs have] an investing period, they have a harvesting period and they’ve got to raise another fund,” he added. “Sometimes they will decide to chalk up a win on year four of an investment, when the best year of the company will be year six. Why? because they have contracts that tell them that.”

This is of course a suboptimal situation. In some cases, Pritzker added, PGVC might buy the interest of the other firms and keep going.

Watch the video

04 When VCs Make Irrational Investing Decisions from Alpha Venture Partners on Vimeo.

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