Many investors are increasing allocations to Venture Capital and other types of Private Investments.
Before investing more now, investors might benefit from spending a little time on reports like ones from the Kauffman Foundation, outlining their 20 year history 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. Senior leaders at our firm have worked with investors since the 1990s to evaluate and invest in many private funds and deals, and we will continue to look for outlier opportunities.
The cover page of the Kauffman report states this, however, related to their “triumph of hope over experience” and lessons learned investing in or committing to 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 – May 2013
Persistence That Just Ain’t So – CFA Institute Enterprising Investor – November 2018
Are We Baking Portfolios with Bad Ingredients? – Tommi Johnsen, PhD – September 2019
Private Investment Access: Should We Beware? – Preston McSwain – June 2019
Kaufman Foundation Venture Capital Report – May 2012
State of Oregon Investment Committee Review – February 2018