Investing in Venture Capital:
information about public companies and the subsequent valuation, astute managers can exploit inefficiencies in the value pricing of less familiar private assets. Diversification into alternatives, he added, reduces risk. He argues that keeping funds in investments that are more liquid is a tactic of short-term players versus that of endowments, which tend to hold until private equities are sold or go public. Swensen says “Investors should pursue success, not liquidity.
Portfolio managers
should fear failure, not illiquidity. Accepting illiquidity pays outsized dividends to the patient long-term investor.” Over the past 20 years, no educational institution has achieved a better performance record than Yale.
Institutional investors are rightfully concerned with fulfilling their fiduciary duties by selecting specific venture funds and Fund Managers with focused market segment expertise.
Understanding which market sectors are most likely to outperform, coupled with identifying capable Fund Managers to exploit those opportunities are a critical component of the investor’s decision making process.
Huge problems still remain to be solved and massive opportunities loom as major corporations, mid to small businesses all seek competitive advantages via new technologies. The emergence of Software-as-a-Service and Cloud computing are major tectonic shifts occurring in the global software ecosystem. Technology’s self-renewing cycling of new wave innovation continues, driven mostly by cost improvements, easier use and vastly greater efficiencies. With new regulatory issues requiring compliance, transparency, privacy, security to high computational performance via cloud computing efficiencies, there’s a massive opportunity for a bunch of smart people to do some incredibly great things. There exist a huge community of seasoned serial entrepreneurs with a deep- rooted passion to build new companies. Venture capital enables and to a great extent, propels this entrepreneurial innovation. Understanding how investors gain access
30 entrepreneurcountry
to the Venture Capital firms leading funding for these innovations, along with their higher returns, is keenly important.
Many of the brand name Venture Capital firms no longer benefit from their founder’s experience, knowledge, network and impassioned mentoring of promising first time entrepreneurs--they have long since retired from active participation, though their names remain on the Fund’s websites.
Though there are pockets of entrepreneurial ideas globally, the epicenter of breakthrough, disruptive technology innovations continues to emerge from Silicon Valley. This is a very unique place with a supportive ecosystem ready to back entrepreneurs’ requirements for launching start-ups successfully.
The weather is excellent, the lifestyle is wonderful, and the scenery exquisite. Stanford University, UC Berkeley, USF and University of Santa Clara provide an abundance of superb
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