Asymmetric Returns
Every investor has heard about people who have gotten rich investing early into companies that developed into corporate behemoths - imagine investing in Amazon when it had its IPO (initial public offering) in 1997 or in Google when it had its IPO in 2004. While buying shares when a company IPOs presents the opportunity for significant earnings, the investors who can see even higher returns are those who are getting in on these opportunities even earlier - well before a company has an IPO.
Venture investments give investors the chance to be a part of these dramatic growth stories and get in on the ground floor of a company before they hit it big. The returns can be exponential, while the loss is limited to the size of your investment. Until recently, however, it was nearly impossible for retail investors to access pre-IPO opportunities. Opportunities were limited to investment banks, family offices and the ultra-wealthy. Now, Vincent allows investors access to this asset class at a relatively low barrier to entry.
Historical Performance
While there is no real way to track the performance of venture as a whole, there are a number of indices that attempt to do so. Cambridge Associates has a Venture Capital Index which uses data "sourced directly from the quarterly fund financial statements provided by the fund managers." As of the end of the 2021, their data showed an average annual return of 11.5% over the past 20 years and 20.8% over the past ten years.
The Thomson-Reuters Venture Capital Index (NYSE:TRVCI) attempts to “replicate the return profile of the VC industry by constructing a theoretical dynamic portfolio in public, liquid assets that tracks the movements of the VC industry.” The performance of the index has generally mimicked the overall venture market and showcases both its return potential and its volatility. Keep in mind that most of the positive returns in venture come from the most successful companies and the median investment is still going to be negative.
Conclusion
As anyone who has ever watched Shark Tank can tell you, there are a lot of businesses out there that need funding - and most of them will never see a profit or a successful exit. By focusing on late-stage venture only, Vincent focuses on established companies with proven business models and a history of generating revenue and raising funds. Vincent will help you traverse this asset class that offers the potential for incredible returns but comes with a high degree of risk.
Simply put, there are no other asset classes that have consistently offered the possibility of sky-high returns in the way that venture does. Hitting on the right company can truly be life-changing. Vincent allows investors to have small amounts invested into a number of different startups across various industries and verticals, creating a diversified startup portfolio within their overall portfolio.
