Why VC Asset Class Still Makes Sense?


It’s been a while since I made last posting. I’ve been busy traveling (London/NYC/Boston) and completing a number business priorities right after trip. This time, I had a chance to meet with various institutions to exchange knowledge and discuss recent investment activities around the globe. Dow Jones LP Summit in last July was also quite helpful even if it was such a last minute schedule that I added onto my calendar.  There were a number of big pensions, endowments, investment banks, and advisers as well as newbie running a small alternative investment program which manages less than $100M. Many different approaches and investment priorities were discussed during this event, but this year, apparently, middle market private equity and clean tech were hottest asset classes in the alternative investors’ circle.

As a true believer of early stage ventures, I have strong conviction why venture capital asset class is still very competitive even if falling exit ratio and value in the public market or private transaction:

  1. Early stage venture is most probable asset class which can create largest value-up.
  2. Entry barrier (i.e. originality with scarcity) created by innovation is a key ingredient of early stage ventures’ success. and;
  3. Entrepreneurial management team, which is willing to take a risk and go extra miles, and, most importantly, know when to execute and when not to (i.e. timing), really creates difference and turns seeds to fruits.

Venture asset class may not give back as sexy return as before (like early 2000s) like many industry observers have recently reported, but experienced general partners in the venture capital world continuously delivers results. Most successful ones are entrepreneurs at heart who will come back even if there are huge obstacles or past failures. Venture capitalists are not only talking about operational improvement, but creating new team and profit-generating business vehicle.


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