Well, it depends on what is your expertise and what you like to do. The skills to work in public and private equity are quite different... You need to be more spectific to hep me answer you! :)

Err... may I ask how this is related to the content of the blog?

Actually, no - it is not "imaginary", as this is contractual.

Thank you! :)

Thank you for your comment.

Maybe I am wrong, however:
i) my understanding is that we will know what is the situation when we have seen realized returns (i.e., not calculated returns based on assumptions or mark-to-market accounting, but real cash-on-cash return)
ii) top decile Chinese funds are one thing (and I must say that I don't know who they are, notably because of the high rotation of people there), overall Chinese funds is another
iii) replicating existing innovation is one thing, innovating in the world competition another. Once China will have had caught up (like Japan) with the US and Europe, we will know if VC in China makes sense (like in the US and Europe) or not (like in Japan)
iv) sooner or later, macro trends translate in micro-economy, we cannot oppose one to the other...

but once again, maybe I am wrong.

This is probably related to their regulatory constraints and their asset management policies. There are some interesting studies on Watson Wyatt's website, for example.

Thank you! :)

Thanks you for the comment. As political correctness has lead to self-censorship and the resulting ignorance breeding some major scandals, I decided not to keep some statements for me. You can perceive them as bold, but there are many examples behind that. Maybe 10 years of experience do not amount to yours, but I had the chance to be on the LP, funds of funds, (VC) fund, and portfolio company level. So I could see who is doing what and in which conditions.

> Lack of expertise: ask yourself how many corporate executives or former funds managers "upgrade" to funds of funds managers. You will have trouble to find any. Interestingly, you have corporate executives joining funds. Most funds of funds managers are former investment bankers, management/strategy consultants and MBAs. They firmly believe that applying models and theories to private equity is the right solution to establish a sound investment strategy, based on a number game. Unfortunately, it is not the case. You need to have an intimate and deep knowledge of the industry you invest in.

> Blunt ignorance: ask the funds of funds managers to explain you how you calculate an IRR. Why there can be different IRRs for a single investment. How you calculate a company's working capital and free cash flows. You would be surprised by the result. I don't mention funds of funds managers investing in IT, cleantech, biotech, (you name it) industries without any clue of what their VC managers are talking about. Reference calls are not enough to assess what the VC investor is doing and how he is perceived by his peers and the general community of company managers. In that respect, TheFunded.com provides more interesting data than typical reference calls.

> Value creation: we are still waiting to see what kind of value they actually create. Because funds of funds performance benchmarks are not available, we cannot assess the financial value creation. I have never heard a VC fund manager who said that a fund of funds has brought him useful contacts, ideas, experience, network... Just cash and some sort of branding effect for the most famous. Endowments, HNWI and family offices bring cash, reputation, but also a wealth of other elements that funds of funds managers do not provide.

> Conservatism: yes. Tell me the proportion of funds of funds managers selecting funds I and II. If it is significant, I will change my mind.

> Information use: unfortunately, this is true. Because most of the data is qualitative and requires a real knowledge of the industry, they most of the time compute data which are meant to be "scientific" as they are quantitative - hence their need of track records, IRRs, multiples, deal per partners, etc. These are interesting facts, but without the qualitative data, their is no way to understand the context and hence the intrinsic performance. Benchmarking has invaded the funds of funds industry, and unfortunately, benefits only to the ones able to show some data to be benchmarked...

> Insensitive to performance: this is a management fee game. They have no leverage whatsoever on the underlying performance of the funds they invest in, referring to what they bring to the funds managers. So why would they bother about the performance? They just need to play the "diversification argument" and the "bad luck, the market went bad after we invested" argument. Without any benchmark to compare their performance, who can actually go against that?

As for the conclusion, exceptions are not making the rule. I made statistics about how many firms had actually more than a full business cycle (10 years) of existence, and the result was unfortunately very low compared to the overall funds of funds managers on the market. Maybe I am "ignorant", but according to these statistics (source: Preqin), I belong to the "old men" in this category...