Do you have any data to support that claim? What proportion of a VC firm’s returns come from a later round’s investors if a firm never has a liquidity event? (IPO or acquisition) And if the firm fails before then, how does the vc firm get paid?
A ponzi scheme is a way of stealing from investors, but it only works if the perpetrator can actually take cash out - in vc, I’ve never heard of a vc firm being able to take cash “off the table” in a later financing round, other than what is meant to be the terminal event for a vc investment, IPO / acquisition.
It's called a "secondary"[1] and it's extremely common. It's how both investors and founders make millions on startups long before an acquisition or IPO, often before the startups are profitable.
As for my take on VCs in general, of course I don't have any actual data to support my rant, it's purely anecdotal based of my personal experiences and should be treated as such.
A ponzi scheme is a way of stealing from investors, but it only works if the perpetrator can actually take cash out - in vc, I’ve never heard of a vc firm being able to take cash “off the table” in a later financing round, other than what is meant to be the terminal event for a vc investment, IPO / acquisition.