Venture capital and value investing fundamentally differ in one key way: VC = long change; VI = short change.
Otherwise I think venture capital has more in common with value investing than any other kind of investing. For example: Both VC and VI believe in deep fundamental analysis, really understanding the fundamentals of a company and ignoring surrounding noise.
Both VC and VI believe in thinking in terms of “owning the entire company” (or a meaningful chunk of it) vs share price speculation.
Both VC and VI believe in taking long view – there is arbitrage opportunity in investing against short-term traders which equals most of market.
Both VC and VI believe Mr. Market is manic-depressive and should be ignored. Prices only matter on day you buy and day you sell.
Both VC and VI believe in portfolio concentration, in making relatively concentrated bets: “All eggs in one basket and watch that basket”.
Both VC and VI believe in the “prepared mind” — always be learning as much as possible at all times to be prepared for big opportunities.
Finally, both VC and VI believe in the “circle of competence” – know what you know and invest in that, not things outside that.
Source: Tweets – 1,2,3,4,5,6,7,8,9
Responses:
@pmarca Says 