Many investors are increasing allocations to Venture Capital and other types of Private Investments.
Before investing, though, investors might benefit from spending a little time on reports like ones from the Kauffman Foundation, outlining their 20 year history in Venture Capital, and a more recent report from the State of Oregon, which has been investing in Private Equity in scale since the early 1980s.
This what they found.
Kauffman Foundation Venture Capital Results
Kauffman Foundation Investment Committee Findings
State of Oregon Private Equity Portfolio Review
Some private investment opportunities have provided investors with solid returns, and we aren’t suggesting that investors shouldn’t keep an eye out for outlier opportunities.
The cover page of the Kauffman report states this, however, related to their Triumph Of Hope Over Experience and lessons learned from investing hundreds of millions into Venture Capital or private Growth Equity funds:
“We Have Met The Enemy… And He Is Us.”
Based on all the excitement and money “gushing into private capital funds,” is this often the case?
We think so.
Six Myths About Venture Capital – Harvard Business Review – 2013
Private Equity Presentations: Are Some Tall Tales? – CFA Institute – 2017
Persistence That Just Ain’t So – CFA Institute – 2018
Private Allocations: Are We Baking with Bad Ingredients? – FWP Research Roundtable – 2019