2020.01.03
The next generation of investors & time diversification & “rugged individualism”
Yet another Substack to subscribe to. Oh well.
We’re over a decade past the Global Financial Crisis, and close to two past the Tech Bubble. Market cycles have a way of creating the next generation of investors. Venture may be a game of increasing returns, as Sequoia and Benchmark have proven, but the cycles do create opportunities for new firms and funding models to arise. My goal as an investor is to find that next generation—surfers before the next big wave.
Here’s some things to read:
Time Diversity in VC Portfolios. Another reason LPs care about this issue is for their own capital pacing purposes. Much like private equity and venture GPs, LPs have to consider their own time diversification. LPs plan their commitments years in advance even, because though their capital is permanent, the spigot doesn’t flow without limits. So when a GP invests too quickly and needs to raise a fund right away, the LPs may be put into a bind. This is why open communication between GPs and LPs is, you know, important.
Welcome to the Roaring Twenties. I hadn’t heard the phrase “rugged individualism” before (I lack culture), but it resonates. Investing to me isn’t picking static organizations, it’s ultimately choosing to partner with individuals. And, I really do believe the individuals who create their own outcomes (writing and other endeavors included) are more likely to succeed. People want to work with interesting people.
Lastly, here’s the view from the wingtip passing over Chicago in 2019. Happy new year.
