The Ontario Teachers' investment is outrageous. They are charging middle-class people (by definition) good money from their retirement savings to make reasonable investing decisions and do due diligence.
[1] https://www.otpp.com/en-ca/investments/our-advantage/our-per...
If the company turns out to be a fraud and the investment worthless, are you still entitled to say "nobody could have known" and "only 1 in 10 has to be a winner"?
Here are the other bets in their venture category: https://www.otpp.com/en-ca/investments/our-investments/teach...
Ontario Teachers were an anchor investor in a round which lots of less clueless people must have passed on.
Not sure why you think this is ok.
they can blur the line between honest mistake, gross negligence, nepotism, corruption, and thievery, enough that people who will applaud beating up a shoplifter for taking 20 dollars of junk will say "oh but they have nice suits and went to Stanford" about someone who gave 75 million dollars for magic beans.
What was it about FTX's lack of internal controls or experienced decision-makers which only TVG was able to identify as a source of value?
https://www.otpp.com/en-ca/investments/our-investments/teach...
Sequoia, Third Point Iconiq etc. Coinbase Ventures gave them money. Blackrock was an investor.
If you want to see FTX as an indictment of the entire venture industry I think there is an argument to be had there. But picking on OTP is just a lazy rhetorical device. They made a similar investment to other funds in the industry they are in, that was a reasonable size of their portfolio in an investment style known to be risky.
Your fourth example, Blackrock, is tellingly neither a seasoned venture fund nor an experienced crypto investor.
TVG put well over 1% of its assets into FTX. Numerous people who work for the venture fund, who are paid 10-100X the income of the retirees in the fund to make investing decisions, went ahead with this investment without asking themselves:
1. Why isn't there a crypto-savvy lead investor for this funding round? Why are we, Teachers Venture Growth, the best placed people to make this investment?
2. Why are 3 individuals with, ostensibly, enormous personal wealth, seeking outside investment from Ontario Teachers for this business?
3. Why isn't this business headquartered in a jurisdiction where people who commit massive financial fraud will be investigated and held to account?
4. What checks and balances regulate the relationship with Alameda, a hedge fund which a) trades with leverage and favorable fee structures on FTX b) is reputed (long before the Series B and the recent trouble) to have privileged access to FTX data c) is run by a romantic partner of the head of FTX?
5. Who are the grown-ups at FTX? You might well think that SBF and his posse have some magical crypto skills. But why don't they have senior people with experience in accountancy, compliance, or risk management helping keep them on the right path? This is the easiest question to answer - you can simply check who works for them, who's on risk committees and other oversight bodies, and what their resume is.
People like to excuse massive due diligence failings like this by pointing out that not all venture investments are supposed to end up in the money. It's fine, if you have huge winners, to use them to justify a certain number of losers.
If you don't have a proven track record for finding out-of-the-park winners, it's perfectly reasonable to ask why you think you can risk large amounts of money on things that look dubious to other investors, while not performing basic checks.