Why do they say "more than 1,000 companies" on their prospectus? But let's say it's 8000 and they don't want to brag. How do they get enough dealflow to diversify? When a company with known founders raises, they have a short list of founder-friendly investors in mind and HVPE isn't on that list for the founders I know. What's the use of diversification when you're only investing in the leftovers?Yea, I think the portfolio's about 30% VC. Very diversified. I think there were about 4-8,000 underlying companies at one point.
If you're asking for private equity that doesn't charge anything for running VC and BO funds. There have been those. One example was Woodford Patient Capital. But then you're just paying for a manager to pick unlisted companies for you. And if you're an innovative start-up, you're going to go with the firm with the best resources, who hire the best people. Not that public companies don't pay a lot for the right managers. Again, I don't think it's fundamentally very different. It's just a different structure.
I find most cases of diworsification overblown, but if there's anywhere it applies, it would be to startups. Fund returns are all about dealflow and standard advice to founders is don't trust VCs outside of the bay. Tiger Global was only able to get in on deals because they took bad terms and were giving away free money. They took huge losses on that and don't do that anymore and they still weren't really in on the hot early-stage deals. How is HVPE getting in on the 5-10 early-stage companies everyone wants to invest in each YC batch and the companies that don't do YC because they know they have enough juice that they can raise on great terms without YC? A founder-friendly VC like Accel has access to early-stage deals that no PE fund can touch.
Statistics: Posted by nulka — Sat Apr 13, 2024 3:18 pm — Replies 27 — Views 2196