Summary of Mahendra Ramsinghani's The Business of Venture Capital

By IRB Media

Please note: This is a companion version & not the original book. Book Preview:

#1 Jan Garfinkle, after spending 20 years in various operational capacities, decided to be a venture capitalist. She raised her own fund and launched Arboretum Ventures, a fund focused on early-stage health care and medical device companies.

#2 The functions of a venture firm can be separated into four key parts: raise a venture fund, build a portfolio of investment opportunities, monitor and add value to this portfolio, and generate a superior financial return via timely exits.

• Language: English
• Publisher: IRB Media
• Release date: May 21, 2022
• ISBN: 9798822524910

IRB Media

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Insights on Mahendra Ramsinghani's The Business of Venture Capital

Contents

Insights from Chapter 1

Insights from Chapter 2

Insights from Chapter 3

Insights from Chapter 4

Insights from Chapter 5

Insights from Chapter 6

Insights from Chapter 7

Insights from Chapter 8

Insights from Chapter 9

Insights from Chapter 10

Insights from Chapter 11

Insights from Chapter 12

Insights from Chapter 13

Insights from Chapter 14

Insights from Chapter 15

Insights from Chapter 1

#1

Jan Garfinkle, after spending 20 years in various operational capacities, decided to be a venture capitalist. She raised her own fund and launched Arboretum Ventures, a fund focused on early-stage health care and medical device companies.

#2

The functions of a venture firm can be separated into four key parts: raise a venture fund, build a portfolio of investment opportunities, monitor and add value to this portfolio, and generate a superior financial return via timely exits.

Insights from Chapter 2

#1

Investors in venture funds, or limited partners, do not hang a large dollar sign at their doors, but they do have capital. LPs include institutional investors and high-net-worth individuals.

#2

The four major asset classes are stocks, bonds, alternative assets, and cash. Investors establish asset allocation strategies to adopt optimum allocation percentages in each of these asset classes.

#3

Allocation is the key to success. When investing in assets, you should put your eggs in different baskets and watch all baskets. The risk and rewards of various assets are evident from this simple example: If an investor had allocated 60 percent in stocks, 30 percent in bonds, and 10 percent in cash, an average annual return would be 9. 2 percent.

#4

There are a variety of alternative assets, and they are listed in Table 1. 1. Some are illiquid and do not provide the same advantages that equities provide: investor capital remains locked in for longer periods, which can be as long as 10 years in private equity and venture capital.

#5

The popularity of alternative assets is evidenced by the growth in their market share. Institutional investors plan to increase their allocations to alternatives over the next few years.

#6

The flow of capital into venture capital funds comes from pension funds, university endowments, foundations, finance companies, and high-net-worth individuals.

#7

The largest source of capital for the VC universe are pension funds. The top pension funds in the world by assets under management are listed in Table 1. 2.

#8

The typical asset allocation strategy for this pool of capital depends on the cash needs of the pension plan. Pension funds are typically allocated around 10 percent to 15 percent of their assets to alternative assets, which include hedge funds, natural resources, private equity, and VC.

#9

The largest endowments, ranked by size, are listed in Table 1. 5.

#10

An endowment generates investment income and provides a cushion against any potential uncertainties. With it, a university can focus on its primary goals of providing education and conducting research, activities that further social causes and knowledge.

#11

Endowments are better suited for investments in alternative strategies than pension funds. They can spend as much as four times the percentage of their assets on alternative assets.

#12

Foundations are a significant force in the world of private equity. They exist to support charitable and nonprofit causes. They aid programs such as childcare, arts and education, health care, climate and environment, and religious and social causes.

#13

There are many types of foundations, including private foundations, community foundations, and corporate foundations. The average allocation plan of 850 foundations and endowments is shown in Table 1. 9.

#14

Within the LP universe, finance and insurance companies provide as much as 25 percent of capital for venture capital and private equity.

#15

The fund-of-funds model emerged in the