For family offices investing in venture, it’s time to hold your nerve. The current reset of the global economy is bringing increasing and greater risks to the surface, as the cost of capital increases and consumer confidence takes a hit. But, even with these macro worries, there are still vintage venture deals to be had.
Despite plenty of dry powder available for venture, much of it is sitting on the sidelines as investors are distracted with issues in their existing portfolios, as well as macro headwinds. That means potentially less competition for new deals, along with more time to spend doing deeper due diligence on potential investments. Consequently, we are seeing a renewed focus on ensuring the business fundamentals are in place before deploying cash.
I always talk about the importance of gut feel in VC deals, but that doesn’t preclude the need to thoroughly assess and analyse the team, market, product, business model and KPIs – to identify any red flags while gaining conviction, comfort and understanding the prospects of the company. This is even more important for family offices, who typically may not have the experience picking deals that dedicated VC firms have.