The “No Free Lunch” in Venture Capital

I have a few favorite sayings in business, but this is the one I find myself constantly trying to disprove:

“There’s No Such Thing As A Free Lunch.”

In efficient markets, you cannot get outsized returns without taking smart risks. But as capital has flooded in, I’ve often caught myself looking for the “arb”—both personally and as a fund.

I’ve looked at all the popular ones:

The Geo Arb

“Should I move to Miami/Austin to save 10-15% on taxes?” Or “Should I move back to SF to catch the next wave?” (I’ve tried this one).

The Fee Arb

“If we raise a bigger fund, we can stack fee income and lock in a more cash.”

The Logo Arb

“If we write a tiny check at a high price into a hot deal, we get the brand halo.”

Sure, these “Arbs” exist. You can save on taxes. You can stack fees. You can “buy” logos.

But after looking at the hard numbers, I’ve come to a boring, terrifying conclusion: These are all distractions, not true arbs.

You cannot “optimize” your way to a top-decile fund by saving on state taxes. You can’t “fee” your way to generational returns.

The only way to get the Free Lunch (the 10x outlier) is to do the actual work: partner with the BEST people (check!), pick contrarian founders, and help them win.

When your commit is high, fees are just you paying yourself. I’m taking money from my left pocket (investment) to pay my right pocket (salary).

Suddenly, the “Fee Arb” disappears. The “Comfort” disappears. You stop playing for a salary and start playing for the multiple.

There is no free lunch in Venture. Just pick the winners and help them succeed!