‘The Valley of Opportunity’ Rethinking Venture Capital for Long-Term Institutional Investors

18 Pages Posted: 7 Feb 2014

See all articles by Jagdeep Bachher

Jagdeep Bachher

University of California Office of Chief Investment Officer

Gordon L. Clark

Oxford University - Smith School of Enterprise and the Environment

Ashby H. B. Monk

Stanford University - Global Projects Center

Kiran Sridhar

Stanford University

Date Written: February 4, 2014

Abstract

Investing in venture capital has been an unsatisfactory experience for many long-term institutional investors, as it has not performed in-line with their expectations for more than a decade. Consequently, many investors have been scaling back their venture commitments and, instead, have been focusing on alternative asset classes that offer the benefits associated with economies of scale. In this paper, however, we argue that venture capital still offers attractive opportunities for intrepid institutional investors. Indeed, we outline a mechanism by which institutional investors can bring venture-backed, capital-intensive companies to commercial scale and, in turn, assist in their success over the long term. Specifically, we identify an opportunity whereby institutional investors can leverage their experience in direct private equity and direct infrastructure so as to realize direct venture investing in creative ways. Rather than being held hostage to the ‘valley of death’ when investing in capital-intensive VC-backed companies, we explain why there may be a ‘valley of opportunity’.

Keywords: Infrastructure, Innovation, Institutional Investment, Venture Capital

Suggested Citation

Bachher, Jagdeep and Clark, Gordon L. and Monk, Ashby H. B. and Sridhar, Kiran, ‘The Valley of Opportunity’ Rethinking Venture Capital for Long-Term Institutional Investors (February 4, 2014). Available at SSRN: https://ssrn.com/abstract=2391005 or http://dx.doi.org/10.2139/ssrn.2391005

Jagdeep Bachher

University of California Office of Chief Investment Officer ( email )

1111 Broadway
21st Floor
Oakland, CA 94607
United States

Gordon L. Clark

Oxford University - Smith School of Enterprise and the Environment ( email )

South Parks Road
Oxford, OX1 3QY
United Kingdom
+44 1865 285197 (Phone)
+44 1865 285073 (Fax)

HOME PAGE: http://www.geog.ox.ac.uk/staff/glclark.html

Ashby H. B. Monk (Contact Author)

Stanford University - Global Projects Center ( email )

United States

Kiran Sridhar

Stanford University ( email )

Stanford, CA 94305
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
752
Abstract Views
5,367
rank
33,790
PlumX Metrics