Whether you are a lone wolf angel, part of an angel group, or investing in a VC fund, the threshold question is: is investing in venture capital for you?
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You don’t need to be a visionary to see the world’s trends toward “clean tech” and sustainable energy. A recent Bloomberg report noted that investors will pump up to $1.9 trillion in new wind and solar capacity over the next decade.
Most banks serve their customers well. But some are just trying to use you. Find out how Bank of America tried to squeeze more interest out of a client by ignoring him.
A Financial Poise column with an entertaining take on the history of private equity and venture capital.
I believe, in fact, that someone heavily invested in the public equity markets (whether directly through stocks or through stock mutual funds) and other widely traded or held asset classes may be irresponsible for not investing in startups. This is because the concept of diversification is commonly misunderstood to mean that as long as you invest in a broad array of stocks you will be well diversified.
My point here is simple: when stupid idea after stupid idea attracts investors, it’s a forward indication that a market is too frothy. When a market sees repeated examples of industry participants making things up, it’s a forward indication that a market has become dangerous.
As a startup progresses and gets closer and closer to becoming profitable, it can look to different types of investors; younger startups have tended to look for money from angel investors whereas VC funds tend to invest in slightly more proven startups.
You should like your entrepreneurs to be a bit more seasoned, at least in their chosen space. The statistics don’t lie: most startups fail. Indeed, most VC-backed businesses also fail. Today’s startup scene has jumped the shark.
Welcome to the first installment of this column. My guiding principle will be to write about things I want my children and my parents to understand about the world of business, investing, finance and law.
For this first installment, I explain the difference between “VC” and “PE.”
There is no universally accepted definition of “venture capital” but the U.S. Small Business Administration’s definition works well: