Scott Murphy AVG Blog January 10, 2019

Investing Through the Downturns

"Be fearful when others are greedy, and greedy when others are fearful." - Warren Buffet

What the Crazy Stock Market Means for VC

Michael Collins | CEO, Alumni Ventures Group

As an investor since 1986, I’ve seen the public stock market go through long bull runs, stark corrections (1987, 1990, 2000, 2008, etc.), times of excessive exuberance, and phases of emotional negativity. As my mom always told me growing up, “this too shall pass.”

Being a good investor requires self-discipline, diversification, process, and dogged persistence. It’s the core of our philosophy at Alumni Ventures Group and what we offer investors.

We also know that the private market is a different animal than the public markets. While capital tends to become more scarce, great companies still get started and funded every day. You can point to numerous unicorns launched during each of the above corrections.

In fact, as this recent NYT article points out, downturns can weed out startup opportunities that are less strong and determined, leaving the best. And market slumps are a great time to go bargain hunting, with valuations cooling from the highs in overheated markets.

Another factor to keep in mind with venture funds: these are ten-year investments. The successful startup you invest in during a downturn will likely be entering a much healthier market by the time it matures into a public offering or M&A.

The bottom line: A consistent commitment to venture capital in a smart, diversified way makes sense. All the other stuff is just noise.

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