sectors offer outsized return potential for their portfolios. But, Emerging Venture Fund Managers who follow a more capital-efficient investment model can deliver industry-leading returns while reducing risk with shortened investment cycles at competitive fees to LPs. The selection process of either brand name Venture firms or Emerging Fund Managers should entail research of their respective track record of investments, actual hands-on involvement of their investments, the firm or Emerging Fund Managers’ lure and stature within the entrepreneurial community (deal flow source), and most importantly, the ethical reputation and transparency in reporting accurate market valuations. Do some serious research here, as the term “success has many fathers” applies in spades to promotional materials.
There are essentially three high potential appreciation types of technology investments which Venture Capitalist traditionally focuses on: seed & early, development stage and late-stage expansion. And, within these 3 categories, there are 3 sub classes: disruptive innovation, enabling technologies and special situations. Market trends and dynamics coupled with technical challenges are very often industry specific. Understanding these issues is critical to the successful mentoring and value creation guidance of start-ups.
Consistently successful returns are achieved
from only a few select firms who diligently study, identify and invest in technologies and markets on the leading edge of disruption. They tend to focus on building companies at the forefront of market forces creating outstanding growth and exit opportunities. These particular Venture Capitalists are notorious for sourcing and developing fast- growing companies in large market growth sectors.
Look for a FoFs Manager with investments in venture
capital funds possessing the
demonstrated expertise, deep experience and qualifying techniques in specific areas of their investment focus. A top tier Venture Capital firm will utilize extensive analytical techniques to evaluate and compare each investment prospect. They will benefit from extensive industry contacts and global business leader connections. These relationships help provide the foundation for executive team recruitment in their portfolio companies, follow-on financings, facilitating strategic corporate alliances, new partnership opportunities and most
importantly, through leading Investment
exit strategies whether Banking
underwriters for IPOs or M&A activity. Doing your homework upfront and placing your bets wisely can result in significant healthy returns whether through a FoFs or direct LP participation in a Venture Capital fund. Of course, past performance is no guarantee of future results.
Special thanks to David Swensen of Yale University, Cain Soltoff, Yale Investment Office, Legendary Venture Capitalist: Bill Draper, Paul Rydberg of Goldman Sachs Private Wealth Management Group, Emmanuel Roubinowitz of Fondinvest Capital and Dr. Mark Cannice, Professor of Entrepreneurship & Innovation at University of San Francisco Graduate School of Management for their sound advice and contributions to this article.
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