Your podcast is one of my favorites, but this is a fundamental misunderstanding or misrepresentation of investing. If you are planning to ask people for their hard earned money based using your newfound position of influence, it’s a flat out dangerous post.
Bitcoin is not the hurdle rate if LP’s are funding with Bitcoin. How about what is the actual return target? 30% IRR? 5x equity? Is that denominated in USD? CAD? BTC?
If in Bitcoin, are Bitcoin companies going to earn revenue in Bitcoin? If so, I thought Bitcoin makes everything cheaper? That means whatever the portfolio company is selling will also decline in Bitcoin-denominated price over time. That’ll destroy the actual hurdles (IRR, equity multipliers. “More Bitcoin” isn’t a hurdle rate). Unless they plan to raise prices to hit an actual hurdle rate, and unless they’re in one of the very few, very small, circular Bitcoin economies, their price increases would be unrealistically absurd for their customer base.
If you’re anchoring the hurdle rate in a fiat currency, then you’re taking on the equivalent of currency speculation, which is hugely complicated on itself, let alone as a layer on top of already the hugely complicated practice of fund portfolio management. And again in the case of using Bitcoin’s returns denominated in fiat currency (₿/$) as the hurdle rate, unless the portfolio companies are earning revenue AND inflating their prices in Bitcoin, hitting hurdle rates denominated in Bitcoin is unrealistic.
If the objective is to acquire more Bitcoin, that’s more going to be a product of either investing in companies that grow faster than Bitcoin- and they will need massive amounts of capital that come with larger VC’s, or investing in companies that use financial engineering such as levering up cash flowing traditional businesses to acquire Bitcoin. The latter is very boring but in my personal experience can deliver returns that outperform Bitcoin without the default risk that comes with speculation on startups.