Because the volatility and risk profile of the two investments is not the same.
The index will pay you beta, which is the market return - no more, no less. If you build a portfolio where you combine an investment in the index fund with other, different investments, you can build many different portfolios which all have different risk profiles. This is useful, as people have different needs.
For example, if you're happy for your money to be locked away for a long period of time (say you're running a university endowment fund), you may be better suited to these longer term, illiquid type of in investments.
With VC you are actually investing in new businesses whereas with stocks, unless you are buying at IPO, you are just buying a piece of a pie. And the upside is much greater. What these results show is that a16z maybe needs to be more discerning but not that the business model is unsound
Perhaps, but we don't really know how much risk many of those VC funds are actually taking. With liquid, publicly-traded stocks we can sort of use variability of returns as a proxy for risk. But there's no equivalent good way to really quantify VC fund risk. Sure you can do risk modeling but it's just an educated guess.
The index will pay you beta, which is the market return - no more, no less. If you build a portfolio where you combine an investment in the index fund with other, different investments, you can build many different portfolios which all have different risk profiles. This is useful, as people have different needs.
For example, if you're happy for your money to be locked away for a long period of time (say you're running a university endowment fund), you may be better suited to these longer term, illiquid type of in investments.