Investment Thesis
Venture Capital funds receive above average returns by investing in successful startups like Uber and Airbnb in early investment rounds. The problem is to identify which early stage companies will be successful and which ones not. The solution is to invest in large quantities of high quality deals, or in other words, to co-invest with Tier 1 VCs in as many deals as possible. The other contributing factor is patience, investors should only invest capital they do not need and can afford to wait 5 – 10 years for returns.
One independent third party analysis looked at the data of Y Combinator startup returns and found a 176% average, including the bad years, and including the losers[1].
Our goal with the fund strategy is to invest a small amount of capital in as many Tier 1 VC early stage (Angel, Pre-Seed, Seed) companies as possible. This can be done either directly or by investing in portfolio funds.
For purposes of capital efficiency, we will attempt to access blended funds that invest in multiple companies rather than individual co-investments in the companies themselves.
[1] https://preiposwap.com/on-the-176-annual-return-of-a-yc-startup-index/ ORIGINAL https://jaredheyman.medium.com/on-the-176-annual-return-of-a-yc-startup-index-cf4ba8ebef19
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