ETF Opportunities Exist Outside High Echelon


    Investors considering venture capital may benefit from looking for opportunities beyond the concentrated number of certain venture firms that invest in the deals that account for 90 per cent of industry performance in a given year, says Cambridge Associates. ‘Venture Capital Disrupts Itself: Breaking the Concentration Curse’ says it is a widely held belief that if investors cannot access this highest echelon of VC, they may as well abandon the asset class altogether. In fact, between 1995 and 2012, the majority of value creation in the industry came from outside the top 10 deals and an average of 61 firms a year accounted for the value created by the top-performing 100 investments each year ‒ a far cry from the conventional wisdom that only the top 10 firms are notably valuable. “It’s certainly true that there are a handful of well-known venture capital firms that have consistently generated outstanding performance,” says Theresa Hajer, managing director at Cambridge Associates and co-author of the report. “But the notion that only the top 10 per cent of the industry matter is both outdated and unsubstantiated and may lead investors to miss attractive opportunities with lesser-known managers that have provided exposure to substantial value creation.”