The Nature of High Tech Ventures ‘By the Numbers’
History demonstrates that the majority of startups will fail. Then why should one invest at all? The ROI of the ‘winners’ can be enormous, and this more than offsets the failures. The key of course is identifying the highest probable winners
This quandary for the average investor highlights the importance of the professional due diligence process provided as one of the services by 808.
Nonetheless, even where good due diligence, expertise and the ‘best laid plans of Mice and Men’ have been applied, any venture can fail. It is generally accepted that the worst plan is to invest in one startup and pray that you ‘lucked out’!
As a casino has a mathematically proven advantage, it only applies over a number of bets, the larger the number the better. To apply the advantage of even the best of due diligence, one must spread it out over many investments. History and math suggest that it takes at least 30 investments to produce a statistically probable acceptable return on investment.
This is another reason why the adage “don’t try this at home” applies. The amount of effort, and perhaps available funds to participate at this level, exceeds most typical non-professional investors. Thus, the 808 fund is a logical solution for most investors. 808 Ventures can spread the total committed capital the investor is willing to risk over a pre-selected and defined Portfolio Profile.
"Only buy something that you’d be perfectly happy to hold if the market shut down for ten years.” Warren Buffett
Time is a crucial factor in investing. It takes considerable time and effort to find, vet, and invest in a quantity of ventures that have realistic prospects; there are many ‘toads’ to kiss in the search for a ‘Prince’.
Second, it typically takes an average of approximately 5 years for the venture to mature and execute an exit strategy.
Third, there is also the element of ‘time-averaging’ to be considered. Markets, and perhaps especially in the high-tech realm, have their ups, downs, busts, and booms. It is only prudent that this distribution of one’s investment into an optimum portfolio be done over a reasonably extended period of time.
Most institutional venture capitalists use a 5 years window for the ‘investment phase’ with a target of total exit in 10 years. 808 does the same. This results in returns likely available in the last 5 years of the investment. 808 (with exceptions for exceptional cases) re-invests the proceeds from each Exit back into suitable investments and potentially creates a higher ROI for the investors at the wind down of the fund in year ten.
The 808 Ventures investment structure offers a unique solution for investors that addresses the rapidly changing landscape of high-tech opportunities. The 808 structure also offers unique choices for large and small investors that seek a wide range of risk prospects. 808 leverages and provides the same due diligence and oversight for their entire range of investors.
If you want to know more about investing in 808 fund or more information on our expanding portfolio click here to contact us.