Jason Del Rey reports on why Jeremy Levine of Bessemer Venture Partners is sitting out some recent venture capital rounds. “Valuations are still just too damn high, he says.”
We couldn’t agree more. Like any investment, you want to buy low and sell high. In venture capital, however, it’s not always possible to time the exit to earn a high valuation — making it even more critical to buy at a low-to-fair price.
Starting a company, either as a founder or a founding investor, is a good way to generate great returns. You always buy low in deals you start.You always buy low in deals you start. -- Len Batterson Click To Tweet
Early stage investing in general is where one finds greater risks as well as the opportunity for greater rewards. It’s the place to be to avoid today’s often-inflated private valuations. At VCapital, our due diligence and investment aptitude comes into play in reducing that risk. Our team focuses on early stage deals, and our historical success rate for venture capital deals over 30 years has been 37% — nearly twice the industry average of 20%.
As the stock markets here and in China proved recently, there is no predictably safe investment. We see the overheated market for late-stage venture capital opportunities for what it is: a unicorn hunt with firms clamoring to take home a trophy, just to prove that they’ve been there.
Unfortunately for many late-stage investors, those trophies come at a high price when the stock market doesn’t agree with the inflated valuations. Better to find rigorously vetted, early-stage deals that are optimized for risk:reward.