If you want to invest in venture capital, I believe it’s more beneficial to invest in a venture capital fund than in individual private companies. By investing in a venture capital fund, you will not only decrease your chances of losing money but also increase your chances of earning a positive return.
I’ve been a venture capital investor since 2001, and I strongly discourage angel investing. More often than not, you will end up losing the vast majority of the time. Additionally, when you lose, you are likely to lose all of your money invested in the private company.
Over time, my conviction in avoiding investments in individual private companies has increased. The main reason is my experience as a limited partner in multiple closed-end venture capital funds.
I’ve seen the outcomes of which companies succeed and which fail. The odds are not in favor of the individual private company investor. As a private company investor, you must diversify. And the easiest way to diversify is through a venture fund.
Long Odds Of Hitting A Venture Investment Winner
As a limited partner, I recently viewed a quarterly update from a small early-stage venture capital fund. I hadn’t attended one for over a year because I prefer to be completely hands-off once I commit and submit capital. Not having to think about how my money is being invested is one of the reasons why I invest in private funds and am willing to pay their fees.
The venture capital fund invests mostly in seed rounds and some Series A rounds. These funding rounds typically occur within 1-3 years of a company’s inception, which means greater risk. However, if the companies succeed, the returns could be enormous. The founders all have
