Geoff Woo: The VC Industry is Built on a Fundamental Lie
Notable investor Geoff Woo bluntly stated that the entire venture capital industry is built on a fundamental lie: VCs claim they invest in outstanding founders before the market sees them.
The reality is that most VCs wait for social proof, pretending to have strong conviction only after rounds are safe and others lead the investment.
True early-stage, high-conviction bets are extremely rare, as most capital opts for a low-risk follow-on strategy.
Source: Public Information
ABAB AI Insight
Geoff Woo has long observed the industry as a founder and investor, and this viewpoint continues his criticism of VC "herd behavior," especially in the current heated stage of AI Infra seed rounds, where many top funds or institutions enter only after traction is evident.
In terms of capital pathways, VCs reduce decision-making risks by waiting for signals (participation from other well-known funds, user growth, media exposure), forming an overall culture of delayed investment in the industry. Only a few truly early, conviction-driven funds can capture the highest returns, while founders' actual fundraising heavily relies on existing networks and proof rather than pure narratives.
Similar to the early 2010s investments in super unicorns like Uber and Airbnb, where a few took significant risks, the current VC industry is in a mid-stage transformation from a "discoverer narrative" to a "social proof-driven" public approach.
Structural judgment: This essentially belongs to capital concentration. The social proof mechanism further concentrates capital on a few projects with existing traction and network endorsements, as the industry's incentive structure rewards "safe follow-ups" rather than independent judgment, pushing the pricing power of top opportunities towards validated signals and amplifying the winner-takes-all effect.
ABAB News · Law of Cognition
VCs claim to have vision but actually prefer others to bet first.
True conviction is scarce, making following the crowd seem so smart afterward.
Those who dare to bet heavily when no one else believes will reap the biggest rewards in the industry.