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There Are Risks Associated With Investing In Private Companies, Venture Capital Funds And Publicly Traded Companies
There are risks associated with investing in private companies, private funds and public companies. Despite the prominence of high profile companies like Facebook, Tesla and others, and their history of creating significant wealth for pre-IPO shareholders, the fact is that most private companies will not go public and most will not be acquired.
For these reasons like other funds we deploy a portfolio approach to reduce risk. This means that we seek interests in a large number of companies vs. just one company. The core strategy employed by many venture capital funds is that they seek to or eventually establish the majority of overall investment returns from 10% to 20% of their portfolio companies. The same is true of us but this cannot be guaranteed and there are still risks involved with investments in funds that cannot be eliminated. Many of these risks mirror investments in public companies, while many are unique to private companies. We have built a list of many of these types of risks for you to review. We recommend that you review them here.