Venture capital offers the best long-term returns
The guest argued that well-selected venture capital is the optimal asset class for long-term investors who can tolerate high volatility and have no career risk.
The argument
He explained that in theory and practice, venture capital carries the highest risk and widest distribution of returns, which naturally demands and delivers the highest long-term returns to attract capital. His family foundation allocated a significant portion of its portfolio to early-stage venture capital to maximize long-term performance.
The thesis, stress-tested
✓ What validates it
- ✓Outperformance of venture capital portfolios relative to public benchmarks over a 10-year horizon
▸ Risks discussed
- ▸High volatility and wide dispersion of returns between top and bottom decile managers
- ▸Potential for near-term underperformance during cyclical downturns in the venture market
Hear it yourself
"As a theoretician, venture capital being the riskiest, having the biggest distribution of returns, should have the highest returns in order to attract sufficient funds. Cambridge Associates would say, look at the data."
00:00 / 00:15