Smart, Streamlined Venture Investment Opportunities for Accredited Investors

MANCHESTER, NH / ACCESSWIRE / February 9, 2023 / Many successful individuals have made many smart financial decisions over the course of their career: maxing out a 401k, diversifying their portfolio, even setting up trusts and other instruments to improve their tax situations or long-term estate planning. These same sophisticated people are now realizing that there is a piece of the investment portfolio mix that they’ve been missing: private equity, and more specifically, venture capital. Venture capital is an asset class dedicated to investing in private companies with the potential for significant and expeditious growth. This asset class behaves largely independently of public markets (Invesco) and has a long history of providing strong returns for investors (Cambridge Associates).

According to data from Cambridge Associates, venture capital has consistently outperformed public markets over 5, 15, and 25-year periods. The most recent data available shows that investors who allocated 15% or more of their portfolio to venture investments saw a median annualized return 300 basis points higher compared to those who allocated less than 5% of their capital to venture investments. Similarly, institutions with a private investment allocation of 30% or more had a median return 200 basis points higher than the median return of institutions with an allocation of 10% or less over the same period.

Even during a period of strong performance in the public markets, venture capital investment has still consistently provided stronger returns. One of the most active venture capital firms in the world, Alumni Ventures, found that from 2010 to 2016 – a significant growth period for the markets as they bounced back from the Great Recession – the average internal rate of return (IRR) for venture capital investments was 21.9%, with the top quartile achieving an IRR of 25.6%. In comparison, the S&P 500 had an average IRR of 12.2% over the same period.

Many believe that traditional venture firms only cater to institutional investors, the ultra-wealthy, and family offices, requiring investors to write a big check for millions of dollars to participate. However, Alumni Ventures is working to democratize venture capital for accredited investors from all backgrounds and experience levels, including those who have no venture capital exposure in their portfolios. With Alumni Ventures, investors won’t be asked to write an enormous check for seven digits. Instead, they can own a diversified portfolio of ~20-30 highly competitive companies invested alongside other established venture firms for minimums as low as $10,000. Alumni Ventures offers three types of funds: members can invest in funds alongside alumni from their alma mater and its community; funds focused on thematic investment strategies; or funds offering exposure to every deal the firm offers. Investors can decide which funds, investment amounts, and level of engagement they want, giving them the flexibility to invest in venture capital on their own terms.

Putting together a venture portfolio from scratch can be a daunting task for many investors. The process of sourcing, vetting, and selecting the right companies to invest in can be time-consuming and complex, leaving many investors with limited and under-diversified portfolios. However, Alumni Ventures has developed a solution to streamline and simplify the entire process for accredited investors. Their team of experts conducts thorough due diligence and builds diversified portfolios for investors, taking into consideration factors such as sector, stage, geography, and lead investors. Alumni Ventures also dutifully entertains a policy of co-investment. By following lead investors, they benefit from the extra diligence, knowledge, and experience paid to the opportunity before they get involved.

Alumni Ventures streamlines the sourcing & vetting process.

The firm leverages its powerful network of 600,000+ subscribers and community members, as well as its 150+ full-time employees, to efficiently source capital and investment opportunities, conduct due diligence, and assist portfolio companies. Alumni Ventures‘ 18 alumni funds (with 10-20 more launching soon) are located at leading universities known for their entrepreneurial activity. This allows the firm to engage with communities where startups and entrepreneurs are emerging and gives Alumni Ventures the advantage of approaching them as fellow alumni to build relationships and gain access to investment opportunities when they are seeking capital. Alumni Ventures is also expanding their network of co-investors, developing a Super Angels Program to help generate greater support for exciting venture opportunities.

The Alumni Ventures team then takes a thorough and methodical approach to evaluating potential investments, beginning by understanding the business and the risks involved. They speak to the management team, review company materials and contracts, consider the lead investor’s perspective, experience, and influence, and conduct a peer review with other members of the Alumni Ventures team. Additionally, they document their analyses in diligence reports, conduct an investment committee review, and use a scorecard to weigh all decisions.

Alumni Ventures prides itself on supporting positive returns driven through portfolio diversity at every level. Alumni interconnectivity amplifies access and allows the firm to cast a broader net and build stronger portfolios by including other funds and seeing more deals, creating better and more diverse combinations for portfolios across industries, locations, and stages of investment. The firm’s portfolio companies represent a broad range of sectors, stages, and regions, with investments spanning 20 distinct sectors and industries, and a global presence across six continents. The investments are also diversified by stage, with 47% seed, 22% Series A, 14% Series B, 12% Series C+, and 5% Other.

The focus Alumni Ventures places on diversification, from process to portfolio development, enables them to provide balanced combinations of risk and reward in entering the venture capital market. With their streamlined process and affinity-based networks, it’s no surprise that the firm has upended the precedent of venture capital gatekeeping, allowing more accredited investors a chance at an asset class shown to generate higher returns.

About Alumni Ventures

Alumni Ventures offers accredited individuals access to network-powered venture capital – a key asset class missing from the portfolios of many sophisticated investors.

CONTACT:

Andrew Mitchell
[email protected]

SOURCE: Alumni Ventures