VC in 33: Why is Diversification Important in Venture Investing?
VC in 33 Seconds
Venture capital thrives on a few big wins. In this short explainer, learn why successful VC strategies focus on large, diversified portfolios—typically 50 to 200 companies—to manage risk and increase the odds of capturing breakthrough returns.
VC in 33: Why is Diversification Important in Venture Investing?
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Venture capital is a hits-driven business. This quick explainer shows why a large, diversified portfolio — often 50 to 200 startups — is key to reducing risk and maximizing chances of returns.
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Michael Collins
CEO, Alumni VenturesMike has been involved in almost every facet of venturing, from angel investing to venture capital, new business and product launches, and innovation consulting. He is the CEO of Alumni Ventures and launched AV’s first alumni fund, Green D Ventures, where he oversaw the portfolio as Managing Partner and is now Managing Partner Emeritus. Mike is a serial entrepreneur who has started multiple companies, including Kid Galaxy, Big Idea Group (partially owned by WPP), and RDM. He began his career at VC firm TA Associates. He holds an undergraduate degree in Engineering Science from Dartmouth and an MBA from Harvard Business School.
Frequently Asked Questions
FAQ
You can find the full transcript below:
Michael Collins:
Venture capital is a hits business. And so the numbers really support having a very large and diversified portfolio. That’s going to de-risk your portfolio, but it’s also going to give you that shot to capture that kind of once in a lifetime opportunity. So most of the data says you want a venture portfolio that has the very least 50 companies in it, and more likely something like a hundred or 200 companies. Alot of people decide the best thing to do is put some money into diversified funds.
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