Value Investing with Venture Capital: Part of a Balanced Investment Diet

Venture capital adds variety to asset class investing

I’m a traditional, conservative investor: 65 years old, successful career, but no windfalls. We’re comfortable, but not super-wealthy.  I still mow my own lawn and love bargains.

A few months ago we invested in venture capital for the first time.  Why?  Aren’t we supposed to be more conservative now?

Full disclosure: I’m doing part-time advisory work for a new venture capital firm.  I’d heard about the JOBS Act, which now allows venture capital firms to solicit funds through the media from accredited investors, who are either millionaires or earn large incomes that enable them to handle the risk.  I’ve marketed shampoo, roach killers, and Oreo cookies. I figured marketing venture capital might be right up my alley.

The reason I took the VC investment plunge is that I believe in diversification and the importance of asset allocation.  While some investments go down, others will go up.  That’s what our professional financial advisor tells us.  Further disclosure: that advisor is our son.

Why invest in venture capital? For diversification and the importance of asset allocation. Click To Tweet

We really are conservative.  We love large cap value and dividends.  We even hold fixed income assets despite today’s low interest rates.

Yet it struck me that investing a couple percent of our assets in venture capital made prudent sense.  We chose a pooled approach including multiple ventures.  Our financial advisor son was in favor, even though he couldn’t handle the sale.  Since he’ll inherit a portion of whatever is left at “the end,” he’s pretty conservative.  But he agreed with the asset allocation thinking.

We’ll invest again, in the venture capital firm I’m now working with, VCapital (  We’ll again choose the pooled investment approach, and we’ll limit our total venture capital to no more than 2 to 3% of total assets.  While the stock market could plunge short-term again at any time, like in 2008, our venture capital investments are longer term.  Payouts are probably 5-10 years away.  Actuarial tables say we should live another 20 years.  Seems reasonable.

VCapital is headed by a graduate school classmate, Len Batterson, who’s been a successful venture capitalist for 30 years.  He takes a measured, logical approach.  Rather than planting small seeds in dozens of start-ups . . . sort of like a lottery . . . his team rigorously screens and vets ventures that have passed their seed fund stage and that continue to look highly promising.  They invest in a limited number of what they assess as the best deals.  Their track record is impressive – a composite annualized return of 29% over 30 years.  Sure they’ve had some losers too, but never a losing fund or losing decade.

That feels like prudent asset allocation — part of our balanced investment diet.

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