📈 Venture debt's loss models break - deferred defaults land on the lenders
Sacks' call: every venture-debt underwriting model was calibrated during the ZIRP window, when startup mortality was artificially suppressed by easy equity. As the deferred mortality arrives, covenants trip, lenders pull runway early to get paid ahead of the equity, and realised loss rates on venture lending come in far worse than the models predict - a bad deal for founders and a mispriced book for the lenders.
0
CONVICTION
peaked 59.8 WATCH
DORMANT
band · contested
▼ SHORT HTGC
expression · bearish equities
MISS
outcome · R -78.5% · α -129.5%
2025-02-04
window closed
⚖ Why this verdict
fully deterministic — evaluate.py replays this from daily closes; nothing below is editable or hand-set
- Window: 2023-02-04 → 2025-02-04 — first mention + 24-month horizon, then the window locks.
- The call: ▼ SHORT HTGC (primary play). HTGC rose 78.5% over the window → direction-adjusted R = -78.5% (the call lost money).
- Benchmark: holding SPY over the same window returned +51.0%
→ α = -78.5 − (+51.0) = -129.5%
— what this call made or lost against just owning the index. This is the number the verdict uses.
Stock-selection read: -27.5% — did HTGC move the predicted way relative to the market. The two only differ on a SHORT: this call was right about direction relative to the index but still cost money versus holding it.
- Rule fired:
· HIT — R ≥ +10% AND α ≥ +5· PARTIAL — R ≥ +5% OR α ≥ 0▶ MISS — everything else
- Credit: supporters of a MISS earn 0 each, opposers the inverse — this feeds the scoreboard weights. supported: Jason, Sacks | opposed: Friedberg | proxy-sensitive: TPVG→PARTIAL (+8.8%)
Conviction timeline
bands: green ≥ 65 · watch ≥ 45 · ember ≥ 15
Plays vs SPY · % since first mention (2023-02-04)
Plays
| expression | symbol | kind | relevance | rationale |
|---|---|---|---|---|
| ▼ SHORT | HTGC | stock | PRIMARY | Hercules Capital - the largest listed pure-play venture-debt lender; the thesis is that its realised losses come in worse than modelled |
| ▼ SHORT | BIZD | etf | adjacent | BDC ETF — broader business-development-company read on private-credit-to-startups (via merged idea venture-debt-asset-class-breaks-2023) |
| ▼ SHORT | KRE | etf | adjacent | SVB was the dominant venture lender but SIVB failed in March 2023 and has no usable price series, so the regional-bank ETF is the tradeable stand-in for the bank side of venture lending |
| ▼ SHORT | TPVG | stock | adjacent | TriplePoint Venture Growth BDC - same borrower base, smaller and higher beta to the same credit thesis |
Mention log
Jason
equities w=0.97 · n=105
· E114 (2023-02-04) · sentiment · strength 2
▶ 51:50
SUPPORT
“On top of all this inefficiency is a dependence on venture debt. I don't know if you're seeing this, Sacks, but the amount of focus on adding debt to unprofitable companies over the last five years has been just extraordinary.”
Sacks
equities w=0.89 · n=96
· E114 (2023-02-04) · explicit_prediction · strength 3
▶ 55:54
SUPPORT
· horizon 60mo
“So look, I just wonder what I don't trust is whether the return models on venture debt that were created over the last five to 10 years will be a good predictor of what the returns will be in the next five to 10 years when a lot of the mortality that should have happened in the past now happens in the future.”
Jason
equities w=0.97 · n=105
· E119 (2023-03-11) · sentiment · strength 2
▶ 31:06
SUPPORT
“And this is exactly what happened in 2008, when people started giving those no recourse or no background check mortgages. Remember those? Where like you didn't have to do a background check to get a mortgage? That's what happened in venture. They just gave these, I saw it firsthand, willy-nilly.”
Who built this conviction
each voice's total force on the score — supports and opposes from every mention, weighted exactly as the replay applied them · share = % of all mention-driven movement
⏳ decay drained -52.5 over the idea's life — that's time passing, attributed to no one
Score events
| episode | kind | Δ | after | note |
|---|---|---|---|---|
| E114 2023-02-04 | init | +37.2 | 37.2 | E114 born by Sacks (explicit_prediction x3) [w=0.89] |
| E114 2023-02-04 | reinforce | +13.7 | 50.9 | E114 Jason support x2 (new voice) [w=0.97] |
| E115 2023-02-11 | decay | -1.0 | 49.9 | E115 silent |
| E116 2023-02-17 | decay | -1.0 | 48.9 | E116 silent |
| E118 2023-03-03 | decay | -1.0 | 47.9 | E118 silent |
| E119 2023-03-11 | oppose | -12.5 | 35.4 | E119 Friedberg opposes x3 [w=0.87] |
| E119 2023-03-11 | reinforce | +9.4 | 44.8 | E119 Jason support x2 [w=0.97] |
| E119 2023-03-11 | reinforce | +8.8 | 53.6 | E119 Sacks support x3 [w=0.89] |
| E120 2023-03-17 | reinforce | +6.2 | 59.8 | E120 Sacks support x2 [w=0.89] |
| E121 2023-03-24 | decay | -1.2 | 58.6 | E121 silent |
| E122 2023-03-31 | decay | -1.2 | 57.4 | E122 silent |
| E123 2023-04-07 | decay | -1.1 | 56.3 | E123 silent |
| E124 2023-04-14 | decay | -1.1 | 55.2 | E124 silent |
| E125 2023-04-21 | decay | -1.1 | 54.0 | E125 silent |
| E126 2023-04-28 | decay | -1.1 | 53.0 | E126 silent |
| E128 2023-05-12 | decay | -1.1 | 51.9 | E128 silent |
| E129 2023-05-19 | decay | -1.0 | 50.9 | E129 silent |
| E130 2023-05-26 | decay | -1.0 | 49.9 | E130 silent |
| E131 2023-06-02 | decay | -1.0 | 48.9 | E131 silent |
| E132 2023-06-10 | decay | -1.0 | 47.9 | E132 silent |
| E133 2023-06-16 | decay | -1.0 | 46.9 | E133 silent |
| E134 2023-06-24 | decay | -0.9 | 46.0 | E134 silent |
| E135 2023-07-01 | decay | -0.9 | 45.1 | E135 silent |
| E136 2023-07-09 | decay | -0.9 | 44.2 | E136 silent |
| E137 2023-07-14 | decay | -0.9 | 43.3 | E137 silent |
| E139 2023-07-27 | decay | -0.9 | 42.4 | E139 silent |
| E140 2023-08-04 | decay | -0.8 | 41.6 | E140 silent |
| E141 2023-08-11 | decay | -0.8 | 40.7 | E141 silent |
| E142 2023-08-18 | decay | -0.8 | 39.9 | E142 silent |
| E143 2023-08-25 | decay | -0.8 | 39.1 | E143 silent |
| E144 2023-09-01 | decay | -0.8 | 38.3 | E144 silent |
| E146 2023-09-22 | decay | -0.8 | 37.6 | E146 silent |
| E147 2023-09-29 | decay | -0.8 | 36.8 | E147 silent |
| E148 2023-10-07 | decay | -0.7 | 36.1 | E148 silent |
| E149 2023-10-13 | decay | -0.7 | 35.4 | E149 silent |
| E150 2023-10-20 | decay | -0.7 | 34.7 | E150 silent |
| E151 2023-10-27 | decay | -0.7 | 34.0 | E151 silent |
| E152 2023-11-03 | decay | -0.7 | 33.3 | E152 silent |
| E156 2023-12-08 | decay | -0.7 | 32.6 | E156 silent |
| E157 2023-12-16 | decay | -0.7 | 32.0 | E157 silent |
| E158 2023-12-23 | decay | -0.6 | 31.3 | E158 silent |
| E159 2023-12-29 | decay | -0.6 | 30.7 | E159 silent |
| E160 2024-01-06 | decay | -0.6 | 30.1 | E160 silent |
| E161 2024-01-13 | decay | -0.6 | 29.5 | E161 silent |
| E162 2024-01-19 | decay | -0.6 | 28.9 | E162 silent |
| E163 2024-01-26 | decay | -0.6 | 28.3 | E163 silent |
| E164 2024-02-02 | decay | -0.6 | 27.7 | E164 silent |
| E165 2024-02-09 | decay | -0.6 | 27.2 | E165 silent |
| E166 2024-02-16 | decay | -0.5 | 26.7 | E166 silent |
| E167 2024-02-23 | decay | -0.5 | 26.1 | E167 silent |
| E168 2024-03-01 | decay | -0.5 | 25.6 | E168 silent |
| E169 2024-03-08 | decay | -0.5 | 25.1 | E169 silent |
| E170 2024-03-15 | decay | -0.5 | 24.6 | E170 silent |
| E171 2024-03-22 | decay | -0.5 | 24.1 | E171 silent |
| E172 2024-03-29 | decay | -0.5 | 23.6 | E172 silent |
| E173 2024-04-05 | decay | -0.5 | 23.1 | E173 silent |
| E174 2024-04-12 | decay | -0.5 | 22.7 | E174 silent |
| E175 2024-04-19 | decay | -0.5 | 22.2 | E175 silent |
| E176 2024-04-26 | decay | -0.4 | 21.8 | E176 silent |
| E177 2024-05-03 | decay | -0.4 | 21.3 | E177 silent |
| E178 2024-05-10 | decay | -0.4 | 20.9 | E178 silent |
| E179 2024-05-17 | decay | -0.4 | 20.5 | E179 silent |
| E180 2024-05-24 | decay | -0.4 | 20.1 | E180 silent |
| E181 2024-05-31 | decay | -0.4 | 19.7 | E181 silent |
| E182 2024-06-07 | decay | -0.4 | 19.3 | E182 silent |
| E183 2024-06-14 | decay | -0.4 | 18.9 | E183 silent |
| E184 2024-06-20 | decay | -0.4 | 18.5 | E184 silent |
| E185 2024-06-29 | decay | -0.4 | 18.2 | E185 silent |
| E186 2024-07-04 | decay | -0.4 | 17.8 | E186 silent |
| E187 2024-07-12 | decay | -0.4 | 17.4 | E187 silent |
| E188 2024-07-19 | decay | -0.3 | 17.1 | E188 silent |
| E189 2024-07-26 | decay | -0.3 | 16.7 | E189 silent |
| E190 2024-08-02 | decay | -0.3 | 16.4 | E190 silent |
| E191 2024-08-09 | decay | -0.3 | 16.1 | E191 silent |
| E192 2024-08-16 | decay | -0.3 | 15.8 | E192 silent |
| E193 2024-08-23 | decay | -0.3 | 15.4 | E193 silent |
| E194 2024-08-30 | decay | -0.3 | 15.1 | E194 silent |
| E195 2024-09-06 | decay | -0.3 | 14.8 | E195 silent |
| E196 2024-09-20 | decay | -0.3 | 14.5 | E196 silent |
| E197 2024-09-27 | decay | -0.3 | 14.2 | E197 silent |
| E198 2024-10-03 | decay | -0.3 | 14.0 | E198 silent |
| E199 2024-10-11 | decay | -0.3 | 13.7 | E199 silent |
| E200 2024-10-18 | decay | -0.3 | 13.4 | E200 silent |
| E201 2024-10-25 | decay | -0.3 | 13.1 | E201 silent |
| E202 2024-11-01 | decay | -0.3 | 12.9 | E202 silent |
| E203 2024-11-08 | decay | -0.3 | 12.6 | E203 silent |
| E204 2024-11-16 | decay | -0.3 | 12.4 | E204 silent |
| E205 2024-11-23 | decay | -0.2 | 12.1 | E205 silent |
| E206 2024-12-07 | decay | -0.2 | 11.9 | E206 silent |
| E207 2024-12-13 | decay | -0.2 | 11.6 | E207 silent |
| E208 2024-12-20 | decay | -0.2 | 11.4 | E208 silent |
| E209 2025-01-04 | decay | -0.2 | 11.2 | E209 silent |
| E210 2025-01-11 | decay | -0.2 | 11.0 | E210 silent |
| E211 2025-01-18 | decay | -0.2 | 10.7 | E211 silent |
| E212 2025-01-25 | decay | -0.2 | 10.5 | E212 silent |
| E213 2025-01-31 | decay | -0.2 | 10.3 | E213 silent |